Weekly Australia Market Wrap for the Week-Ended 1 Dec 2023

More positive news on inflation saw equity market gains in the US, Australia and Europe last week. The US Fed appears increasingly confident that they can get inflation back to 2.00% and this saw US Treasury yields fall.

US 2 year bonds have fallen to 4.56% (from 5.21% on Oct 17) whilst US 10 year bonds have fallen to 4.22% (from 5.00% on Oct 17). Australian bonds have been falling as well with 2 year bonds last week closing at 4.17% (from 4.48% on 1 Nov) and 10 year bonds falling to 4.50% (from 4.96% on 1 Nov).

The S&P/ASX 200 closed 0.47% for the week with the All Ordinaries Index up 0.57% for the week.

In the US the Dow Jones closed up 1.92% for the week and the S&P 500 finished up 0.83% - both had their highest close of 2023. The S&P’s monthly gain of 8.9% was its best since 2020. The Nasdaq finished with a monthly gain of 10.9%. The Dow’s monthly gain was 9.17%. The S&P 500 has closed up 15 out of the last 19 trading days.

Investors appear to be betting against the US Fed’s ‘higher for longer’ mantra with interest rates and are looking for rate cuts in the 3rd or 4th quarter of 2024.

Eurozone shares finished 1.35% higher, China lost 0.31%, Japan fell 0.6% and Hong Kong closed 4.15% lower.

The Australian Dollar continued its rise since a recent low of $US0.6272 on Oct 22, rising to close the week at $0.6670, up 1.78% over the past week.

Weekly sector performance saw Consumer Discretionary +0.46%, Consumer Staple -0.24%, Energy -2.32%, Financials +0.73%, Health +2.25%, Industrials +0.86%, Real Estate +1.20%, IT +2.34%, Materials -0.10%, Communication Services +0.81% and Utilities -2.51%.

Much of last week’s good news was derived from inflation releases. In the US the October number came in at a lower than expected 3.5% while in Australia the Monthly CPI Indicator for October came in at 4.9% year on year down from 5.6%.

Markets now expect the RBA will hold interest rates at 4.35% when it meets on Tuesday. After the CPI the RBA Governor Bullock even suggested Australian households were in a “pretty good position” despite 13 rate hikes since May 2022.

Oil prices closed the week down 0.63% to $US74.07 a barrel.

In Company news Adore Beauty jumped 22.5% on the back of an indicative, non-binding takeover offer from the UK’s THG Plc, Utilities software business Gentrack jumped 27.15%, Pharmaceutical company EBOS climbed 9.77%, Gold miners Perseus and DeGrey rose 12.46% and 7.78% respectively and footwear retailer Accent group gained 7.89%.

Core Lithium fell 21.74% after a broker downgrade from Citi, Mineral Resources shed 5.58%, Origin Energy lost 4.44% as it’s messy takeover floundered, coal miner New Hope lost 3.34% and Santos fell 2.40%.

Next week we will be watching the Australia’s RBA meeting (Tue), Australian September quarter GDP (Wed), US Jobs data (Fri), the Bank of Canada meeting (Wed) and China’s Trade data (Thur).