The ASX is set to rise today. ASX 200 futures are pointing to a positive start, up 0.4% to 8,170 points ahead of the Reserve Bank of Australia (RBA)’s minutes meeting tomorrow and the US Federal election on Wednesday.
A push into the green today is a reversal of last week’s fortunes where the ASX200 closed 92 points lower (-1.13%) at 8,118, as mixed earnings reports from the United States and uncertainty around the US election weighed on Australian market sentiment.
With this week set to be the most significant for markets all year, its outcome is expected to shape the trajectory toward the year-end.
Consumer Staples (-5.47%), Utilities (-3.10%), Health Care (-2.75%) and Financials (-1.58%) were the hardest-hit sectors, while Information Technology (+2.48%), Materials (+0.42%), Consumer Discretionary (-0.15%) and Real Estate (-0.72%) showed relative resilience.
At the individual stock level, Cettire (-30.24%), Paladin Energy (ASX:PDN) (-16.93%), Novonix (ASX:NVX) (-13.75%) and Star Entertainment (-13.21%) experienced double-digit losses.
On the other hand, Pointsbet Holdings (+21.99%), Mineral Resources (+19.02%), Betmakers Technology (+13.64%) and Nuix (+11.69%) emerged as the week’s top gainers.
“The key event on the local calendar this week is Tuesday's RBA Board meeting. Q3 inflation data last week showed that headline inflation at 2.8% YoY has returned to the RBA’s target range,” IG markets analyst Tony Sycamore said. “However the fall was driven by electricity rebates and lower petrol prices.
"The statement from the RBA’s September board meeting repeatedly emphasised that while the RBA expected headline inflation to decline due to Government subsidies, it would view the impacts as temporary and would look through them.
“As such, the better measure of inflation is the trimmed mean. While last week's Q3 fall in trimmed mean inflation (to 3.5% from 4%) brings us closer to the start of an RBA rate-cutting cycle, the continued resilience of the labour market (which has added 267,000 jobs over the past six months) means that RBA rate cuts are likely to be a story for early 2025. As such, we expect the RBA to keep rates on hold a 4.35% before the first RBA rate cut in February 2025.”
Election result could go either way
US stock markets opened November on a positive note, supported by robust earnings from Amazon (NASDAQ:AMZN) and Intel (NASDAQ:INTC), despite a mixed jobs report. Over the week, the Nasdaq declined by 1.57%, the S&P 500 slipped 1.37% and the Dow Jones fell by 62 points, or 0.15%.
October’s nonfarm payrolls revealed that the US economy added only 12,000 jobs, far below the expected 113,000. The shortfall was partly attributed to disruptions from a hurricane and strikes, which accounted for a 37,000-job decline.
Adding to the softer picture, job gains from the past two months were revised downward by 112,000. However, the household survey, likely less impacted by weather, showed a steady unemployment rate of 4.1%.
Meanwhile, the ISM Manufacturing Purchasing Managers' Index (PMI) for October also fell short of expectations, dropping to 46.5 from 47.2 as production slowed. Despite the weaker data, the yield on the US 10-year Treasury ended at 4.38%, marking its highest level in four months.
“Turning to this week's US election, the betting market still leans narrowly towards a Trump victory," Sycamore said.
"A Republican sweep in Congress remains the highest probability at around ~40%. The probability of a Harris win with a split Congress sits at around 23%. Wednesday mid-morning Sydney time is when we finally start seeing actual votes counted.
“Without a centralised body counting ballots nationwide, media giants such as the Associated Press, working with Fox and another media consortium consisting of ABC, CBS, CNN and NBC, step in, tallying votes as they roll in and making projections on a state-by-state basis. These outlets, mindful of their reputations, will only announce a winner when they are sure.
“The timing of the winners announcement hinges on the speed of the ballot counting.
"For instance, Barack Obama's victory in 2008 was clear within mere hours. In 2016, despite a tight race, Donald Trump was declared the winner on election night.
"Conversely, in 2020, it took four days before Joe Biden was announced as the victor, with the high volume of pandemic-driven mail-in ballots slowing the process despite Biden's larger margin compared to Trump's 2016 win. In summary, we might know the result in hours, or it may extend to days.”
European markets higher
European share markets ended Friday on a positive note with gains led by personal care, drug and grocery stocks, which rose 2.3%. Reckitt Benckiser saw a 6.6% surge after the British consumer goods company was cleared of liability in a pre-term formula case.
The broader FTSEurofirst 300 index climbed 1.1% on the day but recorded a 1.5% decline for the week.
In London, the UK FTSE 100 index advanced 0.8% on Friday, though it slipped 0.9% over the week.
Currencies and commodities
Currencies
In currency markets, movements against the US dollar were mixed during European and US trade.
- The Euro fell from US$1.0904 to US$1.0832, settling near US$1.0835 by the US close.
- The Australian dollar dipped from US65.90 cents to US65.53 cents, ending near US65.60 cents.
- The Japanese yen weakened from 151.83 to 153.08 yen per US dollar, closing at JPY153.00.
Commodities
Global oil prices edged higher on Friday amid reports that Iran may be preparing a retaliatory strike on Israel from Iraq in the coming days.
- Brent crude rose by 29 cents, or 0.4%, to US$73.10 a barrel.
- The US Nymex crude price gained 23 cents, or 0.3%, to US$69.49 a barrel.
- Brent posted a weekly decline of 3.9%, with Nymex down 3.2%.
Base metals closed mixed.
- Copper futures rose 0.8% on expectations of US rate cuts.
- Aluminium futures slipped 0.6%.
Over the week, copper gained 0.2%, while aluminium dropped 3.1%.
- Gold futures fell by 10 cents to US$2,749.20 an ounce on Friday, pressured by a stronger US dollar and rising US Treasury yields.
- Spot gold was trading near US$2,735 an ounce at the US close, with bullion dipping 0.2% for the week.
- Iron ore futures dropped by US$1.29, or 1.2%, to US$102.49 a tonne on Friday, as investors weighed a softer global demand outlook against China’s positive economic data and potential stimulus measures from Beijing. The steelmaking ingredient declined 1.7% over the week.
What about small caps?
The S&P/ASX Small Ordinaries (XSO) finished Friday 0.72% lower to 3,136.70 and lost 1.11% over the week.
It has been a quiet morning with Victoria’s Melbourne Cup public holiday tomorrow, shutting down the nation.