Weekly market update - 20th of November 2023
Written and accurate as at: Nov 20, 2023 Current Stats & Facts
This week, global equity markets found renewed vigour, buoyed by a softer-than-expected U.S. Consumer Price Index (CPI) report. The signs of cooling inflation, coupled with data underscoring robust consumer spending, led to a recalibration of interest rate expectations in the U.S., sparking a rally in both bond and equity markets.
In Australia, the S&P/ASX 200 enjoyed a 1.4% uplift, with Resources leading the way at a 2.1% gain, slightly outpacing Industrials at 1.1%. The American market shared this optimistic sentiment, as the S&P 500 and NASDAQ climbed 2.3% and 2.4% respectively. This positive momentum is expected to carry into the new week, with a projected 0.4% rise in the local futures market.
Key Market Drivers:
The U.S. CPI figure was the primary catalyst for this upbeat market tone, which came in milder than anticipated. This development, alongside durable consumer spending data, has diminished the likelihood of further rate hikes in the U.S., with market predictions now leaning towards a 100 basis point easing by 2024. However, the markets remained cautious, reflecting on past premature celebrations over inflation peaks.
Australian Real Estate Investment Trusts (REITs) and IT sectors capitalized on this shift, registering solid gains over the week. Conversely, the Energy sector lagged, affected by a slump in oil prices below $80 per barrel, despite predictions of supply tightness by OPEC and the IEA.
Macro-Economic Landscape:
- Australian consumer sentiment dipped slightly in November, reflecting mixed reactions to the RBA's recent rate hike.
- Business conditions remained robust, though confidence showed signs of contraction.
- The Australian job market continued its strong performance, with higher-than-expected employment growth in October, although unemployment increased to 3.7%.
- Wage growth in Australia recorded its most significant quarterly increase since the late 1990s, aligning with expectations and influenced by the Fair Work Commission’s recent wage adjustments.
- In the U.S., the annual inflation rate cooled to 3.2% in October, with consumer prices remaining stable, suggesting a possible easing in inflationary pressures.
Major Share Price Movements — S&P/ASX 200:
- Elders Ltd +19.1%: Reported a robust full-year profit, exceeding estimates, and offered optimistic forecasts.
- Cromwell Property Group +14.7%: Excelled without direct news, riding the wave of the REIT sector’s rally.
- Centuria Capital Group +14.2%: Gained traction as investors engaged in bargain hunting within the REIT sector.
- Karoon Energy Ltd -12.3%: Declined amidst a weaker oil price environment and a significant Gulf of Mexico acquisition.
- TPG Telecom Ltd -12.8%: Dropped after halting asset sale discussions with Vocus.
- AMP Limited -14.9%: Took a hit following its announcement of a $60 million investment in a new digital bank for SMEs.
- Corporate Travel Management +9.0%: Benefited from positive market sentiments and an upbeat broker conference presentation.
- Mineral Resources Ltd +8.8%: Advanced on news of lithium asset consolidation in Western Australia.
- Pinnacle Investment Mgt +7.5%: Enjoyed another strong week with no specific company news.
- QBE Insurance Group -3.2%: Fell as the market adjusted rate hike expectations.
- Ramsay Health Care Ltd -4.3%: Experienced profit-taking post-announcement of its Asian JV sale.
- Steadfast Group Ltd -4.4%: Raised funds for an acquisition, leading to a slight dip in its share price.