ASX to edge up, $A awaits RBA policy decision

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The yield on the US 10-year note was 4 basis points higher to 2.83 per cent on Friday in New York, a modest move to end a volatile month.

On Wall Street, all three major benchmarks closed lower with the Dow dragged down by Nike and its warning of excess inventory and the need for steep discounts to clear out merchandise.

Hope that the year-to-date sell-off may be nearing an end may be too hopeful.

In a note over the weekend, Goldman Sachs strategist David Kostin said there’s reason to be cautious: “Hedge funds, mutual funds, and retail traders have slashed equity exposures year-to-date. However, investor equity positions remain elevated versus a longer-term history, and we forecast further selling in 2023.

“Rising interest rates, slowing growth, and increased unemployment will drive households to continue selling stocks. Corporates will be the largest source of equity demand due to strong buybacks and weak issuance.

“Foreign investors will be net sellers of US stocks while pension funds will be net buyers. If macro conditions improve, light positioning represents an upside risk to our year-end price target of 3600, but we expect the upside in such a rally would be limited.“

The S&P 500 ended last week at 3586.

In contrast, Fundstrat Global’s technical strategist Mark Newton sees an opening. “The risk/reward should be favourable for bulls to buy dips on declines into next week.”

As for Apple’s slump, even before its further 3 per cent drop on Friday in New York, Newton said daily momentum is now reaching oversold levels in the stock.

“Until/unless June lows near $US129 are violated, this recent decline doesn’t have much significance technically, and should be a buying opportunity heading into next week with optimal levels to consider at $US135-$US138 on weakness.”

Apple closed at $US138.20 to end the US trading week.

Daily News | Online News Today’s agenda

Local: CoreLogic dwelling prices September, MI inflation September

Overseas data: September manufacturing PMIs for Japan (Tankan and Nikkei), Eurozone (Markit), UK (Markit), US (Markit, ISM), US August construction spending

Daily News | Online News Market highlights

ASX futures up 5 points or 0.07 per cent to 6471

  • AUD -1.5% to US64.00 US cents
  • On Wall St: Dow -1.7% S&P 500 -1.5% Nasdaq -1.5%
  • In New York: BHP -0.8% Rio -0.2% Atlassian -0.8%
  • Tesla -1.1% Apple -3% Amazon -1.6% Nike -12.8%
  • In Europe: Stoxx 50 +1.2% FTSE +0.2% CAC +1.5% DAX +1.2%
  • Spot gold flat at $US1660.61/oz in New York
  • Brent crude -0.6% to $US87.96 a barrel
  • Iron ore +US10¢ to $US95.95 a tonne
  • 10-year yield: US 3.83% Australia 3.88% Germany 2.10%

Daily News | Online News United States

Wall Street closed out a miserable September on Friday with more losses.

The S&P and the Dow Jones notched their third consecutive weekly declines, and all three indexes posted their second straight monthly losses.

In the first nine months of 2022, Wall Street suffered three quarterly declines in a row, the longest losing streak for the S&P and the Nasdaq since 2008 and the Dow’s longest quarterly slump in seven years.

Cruise ship operator Carnival dropped 23.3 per cent for the biggest decline among S&P 500 stocks after it reported a bigger loss for its latest quarter than analysts expected and revenue that fell short of expectations.

Nike slumped 12.8 per cent, its worst day in more than 20 years, after it said its profitability weakened during the US summer because of discounts needed to clear suddenly overstuffed warehouses.

Corporate earnings reports for the quarter that ends with Friday’s closing bell will begin landing in a few weeks, and analyst expectations are trending downward.

Analysts now see annual S&P 500 earnings growth of 4.5 per cent, on aggregate, down from the 11.1 per cent estimate when the quarter began.

Quarter-end fund reallocations and so-called “window dressing” is likely contributed to the session’s volatility.

Daily News | Online News Europe

The region-wide STOXX 600 index closed up 1.3 per cent on Friday, briefly paring some gains after data showed eurozone inflation zoomed past forecasts to 10.0 per cent in September, hitting a new record.

The index shed 4.8 per cent during the July-September quarter marking its third straight quarterly decline in what will be its longest such losing streak since 2011.


The Bank of England won’t raise interest rates before its next scheduled policy announcement on November 3 despite a plummet in sterling, a Reuters poll found.

Twenty six of 30 economists in the September 27-30 poll who responded to an extra question said there was a low or very low chance the bank raises rates before the MPC next meets. Only four said the chance was high.

“Raising interest rates inter-meeting would reflect panic and indicate a central bank that is not in control of policy,” said Brian Martin at ANZ.

“It would box the central bank into potentially limitless interest rate hikes if the BoE starts to defend an arbitrary exchange rate level.”

Daily News | Online News Commodities

OPEC and its allies will hold a key ministerial meeting in Vienna on Wednesday at which there’s expected to be a discussion to cut production in an effort to bolster weakening prices.

Reuters reported that the talks are likely to focus on a cut of between 500,000 and 1 million barrels per day (bpd).

Saudi Arabia is budgeting for Brent oil at around $US76 a barrel next year, according to Al Rajhi Capital, an outlook in line with current forward prices but far more bearish than expected by analysts.

The Finance Ministry said in a preliminary budget statement on Friday that it projects revenues next year at 1.12 trillion riyals ($US298 billion), higher than a previous estimate published in December of 968 billion riyals. It envisages a budget surplus of 9 billion riyals, lower than estimated earlier.

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