Weekly market update - 7th of December 2023
Written and accurate as at: Dec 07, 2023 Current Stats & Facts
As the year draws to a close, global financial markets are riding a wave of cautious optimism. Signs of cooling inflation bolstered expectations that central banks, particularly in the U.S., may have reached the end of their rate-hiking journeys. Notably, The U.S. market is anticipating a substantial easing in rates by 2024, with a 125 basis point cut priced in. This sentiment was echoed in the bond markets, where U.S. 2-year treasury yields saw a significant 40 basis point drop last week.
In Australia, the Reserve Bank's (RBA) recent rate hike, coupled with the new Governor's hawkish rhetoric, had set the stage for a potentially aggressive monetary policy. However, a surprisingly tame inflation report for October has provided some respite, hinting at a possible delay in further RBA rate increases until more comprehensive data is available in February.
The S&P/ASX 200 saw modest gains, ending the week up by 0.5%, with industrials outpacing the resources sector.
Key Market Influencers:
- The S&P/ASX 200 capped its strongest month since January 2023, rising 5.0% in November.
- The S&P 500 in the U.S. enjoyed a 9.1% boost, its most significant monthly gain since July 2022.
- Australian inflation cooled to 4.9% year-on-year in October, offering a glimmer of hope for an easing monetary policy.
- Retail sales in Australia dipped slightly in October, reflecting a trend of consumers delaying discretionary spending.
- In Europe, inflation declined to 2.4% year-on-year in November, marking its lowest since July 2021.
Major Share Price Movements — S&P/ASX 200:
Several companies stood out with significant movements in their share prices:
- IRESS Ltd soared by 25.4%, buoyed by an upbeat investor update, reduced debt levels, and upgraded EBITDA guidance.
- Healius Ltd witnessed a 22.3% surge, recovering from recent lows, with additional support from an upgraded broker rating.
- Link Administration enjoyed a 15.1% jump, following AGM comments that pointed towards an upbeat revenue and EBITDA outlook for FY24.
However, not all companies shared in the upward momentum:
- Johns Lyng Group Ltd saw its stock dip by 6.5%, with no significant news impacting its performance.
- Sayona Mining Ltd and Core Lithium Ltd faced declines of 13.9% and 21.7%, respectively, amidst uncertainties in the lithium market and sector-specific challenges.
- Woodside Energy Group Ltd and Corporate Travel Management Ltd also experienced declines, reflecting broader sector trends and profit-taking activities.
As 2023 nears its end, the market landscape is shaped by a blend of cautious optimism and sector-specific challenges. The anticipation of a shift in central bank policies, especially regarding interest rates, continues to be a critical driver of market sentiment. The coming weeks are poised to offer more clarity, especially with the upcoming FOMC meeting and its implications for the global financial scene. Investors and market watchers will keenly observe these developments, hoping for a stable and prosperous close to the year.