The ASX is expected to dip today.
ASX 200 futures are trading 74 points lower, down 1.00% as of 8:20 am AEDT.
The ASX200 finished 247 points (3.44%) higher last week at 7,442. It was the ASX200's highest weekly close in 10 months, leaving the index just 125 points (-1.6%) below the year-to-date 7,567 high.
All 11 sectors closed higher for the week, led by Real Estate (5.13%), IT (+4.80%), Health Care (+4.16%) and Materials (+4.01%). The defensive Utilities (+0.56%), Consumer Staples (+1.85%), Industrials (+2.45%) and Communication (+2.70%) sectors underperformed.
Today’s likely dip comes as the S&P 500 logged its seventh straight week of gains.
Despite this, the markets remain volatile, with analysts increasingly worried about overbought market conditions.
Central Banks are also playing a cautious game. New York Fed president John Williams has pushed back against Fed chair Jerome Powell's dovish policy statements.
“A mixed end to last week as NY Fed president Williams said that the FOMC wasn’t ‘really talking about rate cuts’ right now,” IG Markets analyst Tony Sycamore said.
“Williams's comments appear to be an attempt to tame animal spirits unshackled after Thursday's dovish FOMC meeting.
“The last major economic event in the US before year-end is Friday night's Core PCE price index. The consensus expectation is for Core PCE to increase by 0.2% in November, which would see the annual rate ease to 3.4% from 3.5% – the lowest rate since April 2021. Headline PCE is expected to rise by 0.1% in November, allowing the annual rate to moderate to 2.8% from 3.0%.”
In Australia RBA governor Michelle Bullock will release the minutes of the last rates decision, which while positive are set to keep Australians on edge.
“This week, the key event in Australia will be the minutes from the RBA Board meeting in December, where the RBA kept its official cash rate on hold at 4.35%. The Board Meeting Minutes will be closely scrutinised around what options the noard considered at the meeting, the factors that would prompt the RBA to act on its tightening bias in 2024, and any clues that might suggest the RBA feels its tightening cycle is close to completion,” Sycamore said.
Meanwhile, European Central Banks are united on seeing rate cuts later than market expectations.
What happened last week?
Here’s what we saw (source Commsec):
US markets
Were mixed on Friday. The Dow Jones index notched a record closing high for the third session in a row. And the tech-heavy Nasdaq 100 index closed at an all-time high. But comments by Fed Bank of New York President John Williams that it was too soon to be talking about interest rate cuts dampened some of the day's optimism.
The day also marked the expiry of quarterly derivatives contracts tied to stocks, index options and futures, also known as 'triple witching'.
Shares of Costco (NASDAQ:COST) jumped 4.5% after the retailer topped Wall Street estimates for first-quarter results due to demand for cheaper groceries.
- The Dow Jones index rose by 57 points or 0.2%.
- The S&P 500 index fell 0.01%.
- The Nasdaq Composite index added 52 points or 0.4%.
- For the week, the Dow gained 2.9%, the S&P 500 added 2.5% and the Nasdaq gained 2.8%. All three major averages scored their seventh straight winning week.
European markets
Ended mixed on Friday, with mining stocks up 1.3% and real estate shares down 1%. HCOB's eurozone composite purchasing managers’ index (PMI) contracted for a seventh month in December, falling to 47.0 from 47.6 in November (survey: 48).
The continent-wide FTSEurofirst 300 index rose 0.02% and was up 0.8% for the week, posting its fifth straight weekly advance. In London, the UK FTSE 100 index slid 1% but rose 0.3% over the week.
Currencies
Currencies were mixed against the US dollar in European and US trade.
- The Euro fell from US$1.0997 to US$1.0888 and was near US$1.0895 at the US close.
- The Aussie dollar rose from US66.64 cents to US67.27 cents and was near US66.95 cents at the US close.
- The Japanese yen firmed from 142.42 yen per US dollar to JPY141.46 and was near JPY142.15 at the US close.
Commodities
Global oil prices fell on Friday following a see-saw session, in which prices fell more than US$1 a barrel at one point, as traders tried to reconcile mixed signals for oil demand in the coming year.
- The Brent crude price fell by US6 cents or 0.1% to US$76.55 a barrel.
- The US Nymex crude price slid US15 cents or 0.2% to $71.43 a barrel.
- Oil eked out a gain of between 0.3% and 0.9% for the week, snapping a 7-week losing streak.
Base metal prices were mixed on Friday.
- Copper futures dipped 0.1% as the US dollar strengthened. Copper jumped 1.7% over the week.
- Aluminium futures gained 1.5% and were up 4.7% for the week, the most in five months.
- The gold futures price settled lower by US$9.20 or 0.4% to US$2,035.70 an ounce on Friday. Bullion was up 1.1% for the week after the Fed signalled rate cuts would be coming soon. Spot gold was trading near US$2,018 an ounce at the US close.
- Iron ore futures slipped US14 cents or 0.1% to US$135.08 a tonne on Friday after Chinese data - including retail sales and industrial output - showed the recovery in Asia's largest economy is still patchy. Iron ore fell 0.3% for the week.
What's next for Australian stock market?
Wealth Within chief analyst Dale Gillham runs the ruler over what to expect with the ASX in the coming days and week.
"Given that the All-Ordinaries Index continued its rise, my advice to be patient in the last few months has been well worth the wait. Last week, the Australian market rose over 2.6% so far and 9.5% since the low on October 30.
"While this year has been a rollercoaster ride with the index rising and falling strongly, it was only a few weeks ago that the All Ordinaries Index indicated almost zero growth for the year.
"Currently, the All Ordinaries Index is up over 5% and looking strong, and while I think it will finish the year in positive territory, it would not surprise me if the index traded down on at least one of the next two weeks.
"If that doesn’t occur, it will pull back for one or more weeks in January. This means you won’t need to jump into stocks on the FOMO; instead, you can take some time over the next month to set yourself up for 2024."
What about small caps?
The S&P/ASX Small Ordinaries (XSO) finished Friday 0.52% higher to 2,859.70 and was up 3.17% to 2,859.70.
It has been a slow news start to the last trading week before Christmas, but you can read about the following and more throughout the day.