Weekly Australia Market Wrap for the Week-Ended 17 November 2023

Last week was very positive for equity markets with a lower than expected US inflation print (3.2% for October) seeing bond yields fall 10-20 basis points and consolidating the view that we have likely seen a peak in US interest rates. The UK inflation number was also revealed last week and showed that inflation is also moderating in the UK.

The US reporting season continued to churn out good numbers and President Biden’s meeting with China’s Xi Jinping in San Franscisco appeared to ease trade tensions between the two nations.

The US equity market rallied with the Dow Jones rising 1.93%, the Nasdaq climbing 2.29% and the S&P 500 lifting 2.11%. Eurozone shares rose 2.80%, Japan gained 3.12%, Hong Kong rose 1.46% and China gained 0.51%.

In Australia the S&P/ASX 200 rose 1.04% while the All Ordinaries Index climbed 1.18%.

The Australian Dollar continued its recent positive run climbing to $US0.6470 after trading below $US0.63 in late October. Signs are it will continue to push higher in the medium term as the RBA continues to talk a tough game on inflation and interest rates.

Some good sector moves were seen with Real Estate the standout. It rose 3.98% over the week with Cromwell property Group jumping 14.67% and Centuria lifting 14.23%. Lend lease gained 8.90%, Charter Hall lifted 8.19% and GPT rose 7.22%. Despite rising interest rates, it seems landlords are locking in some decent rent rises and there is also talk of increasing M&A activity in the coming twelve months.

The IT sector gained 3.92% over the week with strong rises seen from WiseTech (+8.08%), Altium (+5.11%), IRESS (+3.94%) and NextDC (+3.93%). Altium’s CEO said at this week’s AGM they were on track for a very strong 2024.

The Materials sector rose 3.11% with Mineral Resources gaining 8.76%, Fortescue jumping 6.19% and Boral rising 6.61%. Mineral Resources was active during the week after pumping $19 million into the $100 million capital raise by Wildcat Resources. Boral upgraded guidance on its 2024 earnings.

BHP rose 2.96%, Rio Tinto gained 4.58% and Gold Miner De Grey climbed 7.89%. The Gold price rose 2.61% to $US1980.90 per ounce.

In other commodity news the Lithium price continued its downward trend falling 5.39% for the week. Allkem dropped 3.44%, Pilbara Minerals managed to eke out a small $0.05 gain and other lithium sticks were mostly flat.

One of the big moves last week was in energy sector with the Oil price shedding 4.64%. Since climbing to over $US93.50 per barrel after the October 7 attack on Israel, the oil price has fallen to close last week at $US72.90 a barrel – a substantial drop and linked to oversupply concerns.

Woodside fell 1.97% and wasn’t helped by a downgrade from Citi earlier in the week. Canadian fund manager Brookfield, Singapore’s Temasek and GIC have been attempting to takeover Origin Energy but Australian Super has been trying to thwart the move. Last week it acquired more shares to move to a 16.5% blocking stake in the company. It has been trying to get the suitors to pay more for Origin and is prepared to stump up cash to support its view that the company is undervalued. Origin closed down 0.58%.

Karoon Energy fell 12.20% after completing a $364 million capital raise.

Graincorp continued its recent strong price action rising 6.93% over the week as it announced a strong annual result and a special dividend. It is up 16.85% since October 26.

Fellow Agribusiness Elders rose 19.09% last week despite reporting lower revenue and a lower statutory profit.

Travel stocks were generally back in favour with Corporate Travel Management rising 9.01% and Webjet lifting 3.00%. Flight Centre however fell 1.95% for the week.

AMP shares fell 14.92% as the company downgraded margin expectations and announced a new $60m investment in a UK digital banking solution. Shares closed at the lows from early 2022 which were equal to the lowest in the company’s history.

Australian jobs data surprised on the upside during October but is generally within the expectations of the RBA.

This week we will be watching the Minutes from the recent US Federal Reserve meeting (Tue), Canadian inflation (Tue), Japan inflation (Fri) and Euro Business Condition (Thu).

In Australia the minutes of the RBA November meeting will be released (Tue) and Business Conditions (Thu).