The ASX is set to rise today. ASX 200 futures are 0.6% higher to 8,296 points.
The ASX200 closed last week 64 points higher, gaining 0.79% to finish at 8,214, buoyed by renewed optimism in Chinese markets ahead of an anticipated briefing by China’s Ministry of Finance. However, the much-anticipated announcement ultimately fell short of expectations.
“Saturday’s briefing by the China Ministry of Finance has turned out to be a flop," IG Markets analyst Tony Sycamore wrote in his morning note. "The fiscal measures needed to remove downside risks to growth and ignite the animal spirits within Chinese consumers conspicuous in their absence.
“Adding fuel to the fire, Sunday’s release of cooler-than-expected Chinese CPI and PPI data for September has only served to reinforce the need for fiscal stimulus.
"Strap in, folks, we are likely in for a wild start to trading on Monday morning for the ASX200 and Chinese equity markets. Specifically, I would expect the Hang Seng to open ~2.5% lower at 20,750ish.”
In terms of sectors, Information Technology led the gains with a 2.46% rise, followed by Financials (+2.40%), Health Care (+1.66%) and Consumer Discretionary (+1.64%). On the downside, Energy (-1.87%), Materials (-1.43%), Real Estate (-1.15%) and Utilities (-0.29%) were the weakest performers.
At the stock level, notable gainers included Cettire Ltd, up 26.82%, Lake Resources Ltd with a 23.08% rise, ZIP gaining 14.51% and Liontown Resources (ASX:ASX:LTR) Ltd up 12.84%. On the other hand, Sigma Pharmaceuticals dropped 9.07%, DroneShield Ltd (ASX:DRO, OTC:DRSHF) fell 7.60%, and both James Hardie Ltd and Deep Yellow Ltd (ASX:DYL)declined 5.71%.
The main event on the domestic calendar this week is Thursday's Labour Force Report.
In August, the Australian economy exceeded expectations by adding 47,500 jobs, compared to the forecasted 25,000, while the unemployment rate held steady at 4.2%.
For this month, preliminary forecasts anticipate a 25,000 job increase, with the unemployment rate expected to remain at 4.2%.
Meanwhile, the Australian interest rate market begins the week pricing in a 10-basis-point cut by the Reserve Bank of Australia (RBA) for December, with 45 basis points of cuts expected by May 2025.
US markets
US stock markets ended last week on a high, with the S&P 500 and Dow Jones reaching new record levels. The S&P 500 gained 1.11%, the Dow Jones rose 1.21% and the Nasdaq 100 advanced 1.18% over the week.
Friday’s rally was driven by strong bank earnings, with JPMorgan (NYSE:JPM) climbing 4.4% to US$222.29 and Wells Fargo (NYSE:WFC) rising 5.61% to US$60.99. The KBW Nasdaq Bank Index ended the week 3.97% higher, its highest level in two and a half years.
However, Tesla (NASDAQ:TSLA) dropped 8.8% to US$217.80 as investors reacted negatively to its underwhelming Robotaxi event.
“On the economic front, Friday's data showed PPI flatlining in September, below expectations of 0.1%. However, revisions to August lifted the annual rate to 1.8%, above expectations of 1.6%," Sycamore wrote.
"Airfares, along with other components that feed into the Personal Consumption Expenditures (PCE) index were hotter than expected. Meanwhile, the preliminary University of Michigan Consumer Sentiment Index fell to 68.9 from 70.1 prior, with declining expectations and ongoing election uncertainties weighing.”
This week, market attention will centre on earnings reports from major companies, including Bank of America (NYSE:BAC), Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:NYSE:MS), Citigroup and Netflix (NASDAQ:NFLX).
Investors will also be closely monitoring speeches from several Federal Reserve officials and September’s retail sales data. As the November Federal Open Market Committee (FOMC) meeting approaches, the rates market is currently pricing in 22 basis points of rate cuts, down from 40 basis points just a few weeks ago.
European sharemarkets
Closed higher on Friday, with rate-sensitive real estate and financial services stocks leading gains, rising around 1% ahead of the European Central Bank’s (ECB) interest rate decision scheduled for Thursday.
- The continent-wide FTSEurofirst 300 index advanced 0.5% on the day and gained 0.8% for the week.
- In London, the UK FTSE 100 index rose 0.2% but ended the week down 0.3%.
The UK’s economic output (GDP) grew by 0.2% in August, matching economists' expectations.
Currencies and commodities
Currencies
Currencies showed mixed movement against the US dollar during European and US trading.
- The Euro declined from US$1.0953 to US$1.0926, settling near US$1.0935 by the US close.
- The Australian dollar strengthened, rising from US$0.6723 to US$0.6759, ending the session near US$0.6750.
- The Japanese yen weakened from JPY148.60 per US dollar to JPY149.26, closing near JPY149.10.
Commodities
Global oil prices closed lower on Friday but posted a second consecutive weekly gain as investors assessed potential supply disruptions in the Middle East and the impact of Hurricane Milton on fuel demand in Florida.
- Brent crude dropped 36 cents, or 0.5%, to US$79.04 a barrel.
- US Nymex crude declined 29 cents, or 0.4%, to US$75.56 a barrel.
- Both benchmarks rose over 1% for the week.
Base metal prices increased.
- Copper futures up 1.5%.
- Aluminium futures gained 1.9% on supply concerns from Guinea. Despite the Friday gains, copper dipped 1.6% and aluminium fell 0.5% over the week.
- Gold futures surged by US$37.00, or 1.4%, to US$2,676.30 an ounce on Friday, supported by US inflation data that reinforced expectations of another rate cut. Spot gold traded near US$2,656 at the US close, rising 0.3% for the week.
- Iron ore futures increased by 63 cents, or 0.6%, to US$106.44 a tonne on Friday, although they recorded a 2.2% weekly decline, their first in three weeks, as traders awaited further fiscal stimulus announcements from China.
On the small cap front
The S&P/ASX Small Ordinaries (XSO) closed 0.46% higher on Monday to finish at 3,178.70. Over the five days, it was 2.46% higher.
It has been a slow start to the week for small cap newsflow as quarterlies start to trickle through.