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ASX to rise; Fed signals rate hike moderation; gold entices central banks

Stock Markets Nov 24, 2022 10:31
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A strong session on Wall Street overnight set the ASX up for a day of gains.

ASX futures imply the benchmark index will jump 6 points higher at the open, up 0.08%.

What’s new on Wall Street?

US markets finished on a high ahead of Thanksgiving celebrations and even the Federal Reserve had some good news.

Investors welcomed minutes from an early November meeting between Fed officials, which revealed the central banking system could be one step closer to slowing interest rate hikes.

“A substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate,” the minutes read.

The news saw major indices rally: The S&P hit a two-month high, breaking through the 4,000-point barrier and the Nasdaq led gains with a 0.99% jump.

The mood boost saw 56% of US stocks advance, and all bar one sector (energy, down 1.16%) finished in the green on Wednesday.

Investors went back to growth stocks — consumer discretionary and tech stocks led the charge with 1.33% and 0.8% gains.

Tesla (NASDAQ:TSLA) shares staged an 8% rally but Credit Swisse dropped 6.2% as it braces for a pre-tax loss of up to US$1.6 billion in Q4.

Commodities and currency

Oil inched closer to year-to-date lows overnight as G7 nations consider a price lock on Russian petroleum.

West Texas Intermediate gave up 1.19% before the bell, while Brent Crude dropped to US$79.99 a barrel.

And while signs that rate hikes could be moderated boded well for New York, the US dollar told a different story.

Local currency and bond yields sank on the news, meaning the Aussie dollar notched a 1.29% gain overnight.

Looking at bullion, Capital.com senior market analyst Justin McQueen said gold could benefit as central banks favoured the safe haven investment over currency.

“According to the World Gold Council, central banks have been buying gold in Q3 at the fastest pace on record at roughly $20 billion,” he explained.

“Among the largest buyers of gold, this includes Turkey, Qatar and Uzbekistan.

“However, there have been central banks that have not been identified that have purchased a sizeable amount of gold. Some speculate this may be in fact China, as per reports in the Nikkei.

“The rationale is that China would look to reduce their exposure to the US dollar and therefore has been stockpiling on gold.

“Now while China’s involvement cannot be confirmed, the fact that central banks have been excessively accumulating does provide an undercurrent of support for the precious metal.”

On the ASX

AGL Energy (ASX:AGL) (ASX:AGK) will close its Torrens Island ‘B’ power hub in 2026, bringing the giant one step closer to developing a low-carbon industrial energy hub.

The ASX 200-lister has expended $475 million on major energy projects at Torrens Island in the last few years, including the 250-megawatt Torrens Island battery, which is expected to be operational mid-next year.

In other news, Harvey Norman is among the large caps hosting its AGM today. Earlier this morning, it announced a 6.9% jump in aggregated sales and doubled down on its vision to open 80 stores in Malaysia by 2028.

Things are less rosy for mining giant Regis Resources, however — in his AGM address today, chairman James Mactier said the share price performance had been “very disappointing, largely because of these sector-wide concerns”.

Nevertheless, Mactier said underlying business continued to move from strength to strength, and that he expected production, cashflow, earnings and resources to grow in the future.

Read more on Proactive Investors AU

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ASX to rise; Fed signals rate hike moderation; gold entices central banks
 

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