Ahead of tomorrow’s Federal Budget announcement at which Treasurer Jim Chalmers will highlight the state of Australia’s economy in the face of rising inflation and interest rates, the Australian share market is buoyant (well, today it was).
The S&P/ASX200 closed up sharply Monday, gaining 102.60 points or 1.54% to 6,779.40.
Top-performing stocks in this index were Novonic Ltd up 33.48% and Evolution Mining up 7.73%.
Over the last five days, the index has gained 1.73% but is down 8.94% for the last year to date.
All sectors gained, with Materials leading the way up 2.51% and Information Technology up 2.25%. The worst performer was Energy which gained 0.74%.
As well as the budget, the annual general meetings of Rio Tinto (ASX:RIO) Group, Tabcorp Holdings, Dexus Property Group, Woolworths Group, Whitehaven Coal (ASX:WHC), Wesfarmers (ASX:WES), JB Hi-Fi, Bega Cheese and Corporate Travel Management to start may also affect investor sentiment.
Other points of interest:
- Rishi Sunak is likely to become the UK’s next Prime Minister and will need to sort out the farce that now marks the country’s conservative party. Boris Johnson withdrew from a comeback.
- Australia’s richest woman Gina Rinehart withdrew Hancock Prospecting’s $15 million sponsorship, leaving Netball Australia, which is already $7 million in debt, in dire straits.
- Days after being hacked, Medibank apologised. Not for being hacked but for the worse crime of sending letters to dead relatives of those who may have been affected by the hack.
“In some cases, we will have written to former customers and unfortunately that might mean we have sent communications to some people who have passed away.
"We understand that receiving such a letter could be distressing to family members and we apologise if we have caused hurt in our efforts to communicate to everyone as quickly as possible.
“We are required by law to retain certain information for particular periods of time – seven years for adults and 25 years for children.”
In the news today
What to expect from the budget
Prime Minister Anthony Albanese has decreed this budget as being about responsible economic management.
It will target cost of living relief and election commitments including cheaper childcare, investment into aged care, cheaper medicines and creating a better NBN network.
“I’ve been in parliament for 26 budgets but only seven of them have been from Labor,” Albanese told the Canberra party room.
The three things to watch this week
Josh Gilbert, market analyst at eToro, shares his three things to watch in Australia this week.
Commentary from the Reserve Bank of Australia (RBA) is that they expect inflation to rise further, so this reading, although rising once again, is unlikely to change the RBA’s immediate course.
Markets are currently pricing a 25bp hike in November and the reading would need to come in much hotter than the 1.6% estimated rise in CPI to sway the RBA back to a 50bps hike in November.
Food and energy prices will once again see sharp increases, but food inflation is rising at a faster rate than many had anticipated, hurting the everyday consumer but benefiting stocks such as Coles Group and Woolworths.
Some big names will report shortly, including OZ Minerals Ltd, Pilbara Minerals, South32 and Coles Group Ltd.
The focus for miners is usually on production and any updates on guidance as we approach the end-of-year reporting season.
Pilbara Minerals is likely to be the standout name for the week as lithium prices continue to skyrocket, and shares have risen more than 50% so far in 2022. Investors will be looking for an update on Pilbara Minerals’ Ngungaju project to aid production as lithium demand continues to soar globally, outstripping supply.
These are four of the biggest companies on the S&P500 and their results will likely lead market performance for the week.
Already this earnings season, plenty of companies have cited the effects of the surging US dollar on earnings, and this could be a similar story next week.
As a result, downgrades heading into Q4 will be heavily in focus, but many of these tech companies have so far shown they can navigate the murky waters. This leaves room for potential upside surprises, given low expectations and sentiment heavily depressed.
Five at Five
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On your six
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The one to watch
Kingfisher (LON:KGF) Mining hits up to 17.6% TREO at regional Mick Well targets
Kingfisher Mining Ltd (ASX:KFM) CEO James Farrell joins Proactive in the virtual studio to highlight rare earth element (REE) discoveries at its wholly-owned Mick Well Project in Western Australia.
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