Adairs, BlueScope, McGrath to report; ASX to slip

   2023-02-19 17:02

On bitstamp.net, bitcoin was 1.4 per cent lower at $US24,433.

The yield on the US 10-year note ended 5 basis points lower to 3.81 per cent on Friday in New York. The two-year yield was 4.62 per cent.



US markets will be closed on Monday for Presidents’ Day.

Today’s agenda

No local data

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Overseas data: Eurozone consumer confidence February; UK Rightmove house prices February

Other top stories

Chalmers to slam the door shut on early access to super Labor’s legislated objective for superannuation will spark renewed calls to scale back tax breaks amid calls to limit superannuation balances to $5 million.

Reserve Bank of New Zealand expected to lift cash rate to 4.75pc The 50 basis point increase would equal an easing from 75 basis points in November as the RBNZ battles to contain soaring food prices.

Virgin IPO puts spotlight on top bankers Bankers from Goldman Sachs, UBS and Barrenjoey are spearheading what could be the equity market’s largest deal of 2023 as uncertainty clouds capital markets.

What’s behind the biggest yo-yo trade this earnings season? Corporate Travel Management shares were smashed on releasing earnings results last week. Then the fans swarmed.

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Truckloads of $40,000 fridges show high-end sales holding up The CEO of the $1.1 billion retail group which owns Appliances Online says sales in January and early February are brisk.

Market highlights

ASX futures were down 1 basis point to 7273

  • AUD -0.2 at 68.66 US cents
  • On Wall St: Dow +0.4% S&P -0.3% Nasdaq -0.6%
  • In New York late: BHP -1% Rio -0.6% Atlassian -3.5%
  • Tesla +3.1% Apple -0.8% Amazon -1% Microsoft -1.6%
  • In Europe: Stoxx 50 -0.5% FTSE -0.1% CAC -0.3% DAX -0.3%
  • Spot gold +0.3 to $US1842.36/oz in New York
  • Brent crude -2.5% to $US83.00 a barrel
  • Iron ore +0.9% to $US125.70 a tonne
  • 10-year yield: US 3.81% Australia 3.81% Germany 2.34%

United States

Key US data points this week will be the release of the latest Federal Reserve policy meeting minutes on Wednesday and personal spending data on Friday.

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TD Securities: “We expect core PCE prices to accelerate in Jan to its strongest m/m pace in five months, also outpacing the core CPI’s 0.4% m/m gain. The y/y rate likely stayed unchanged at 4.5%, suggesting price gains remain elevated. The report is also expected to confirm that the consumer remains alive and kicking, posting an increase that is likely to more than make up for recent weakness.”

Fundstrat Global’s Tom Lee said he continues to hold to his view that US equities will record “strong gains” in 2023 though investors “must respect” that seasonal lows may persist through early March.

“The best way to play easing financial conditions, in our view, is owning Technology and even small-caps.”

Lee sees the S&P 500 rallying from March 7 to March 18 before stalling through early April, then rallying strongly from April 8 through early May.

‘Hard landing’ scenario

The resilience of the US economy at the start of 2023 has a number of strategists and economists rethinking how high interest rates will rise and how long the Federal Reserve will keep them there.

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Fitch: “Our core view is that the US economy will dip into a very light and shallow recession in the second half of the year. Full-year growth will print at 1.0% in both 2023 and 2024, while we see the unemployment rate rising from 3.4% currently to about 4.5% by end-2023.”

For Fitch, the prospect of more aggressive tightening by the Fed could renew demand for the US dollar and result in more volatility for US equities, potentially driving them back to their October lows, or even lower.

“The prospect of a more aggressive Fed also poses material downside risk to medium-term growth, which could ultimately sink the US economy into recession in late-2023 or early-2024.”

Commodities

Tesla has been weighing a takeover of battery-metals miner Sigma Lithium Corp, people with knowledge of the matter told Bloomberg, amid rampant demand for the metal used in electric vehicle batteries.

Sigma Lithium is one of multiple mining options Tesla is exploring as it mulls its own refining, one of the people said.

China will scrutinise Ford Motor’s recent agreement with Contemporary Amperex Technology to ensure the Chinese battery giant’s core technology isn’t handed over to the US carmaker, another sign of geopolitical tensions between the two powers complicating business deals.

Ford said last week the tie-up would see CATL’s lithium iron phosphate, or LFP, battery technology licensed for use in a new $US3.5 billion electric-vehicle battery plant that Ford will run and control in southwest Michigan.


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