ASX to rise, Wall Street lifted by data, earnings

Market highlights

ASX futures up 24 points or 0.4% to 6890 near 7am AEDT

• AUD +0.4% to 63.59 US cents
• Bitcoin +6.6% to $US33,803 at 7.17am AEDT
• On Wall St: Dow +0.6% S&P +0.7% Nasdaq +0.9%
• In New York: BHP +2.5% Rio +3.4% Atlassian +2.5%
• Tesla +2.1% Apple +0.3% Microsoft +0.4% Amazon +1.6%
• VIX -6.9% QQQ +1% TLT +1.3%
• Stoxx 50 +0.6% FTSE +0.2% DAX +0.5% CAC +0.6%
• Spot gold +0.2% to $US1976.29/oz at 1.57pm in New York
• Brent crude -1.8% to $US88.20 a barrel
• Iron ore +2.9% to $US116.05 a tonne
• 10-year yield: US 4.82% Australia 4.68% Germany 2.82%
• US prices as of 4.59pm in New York

Stocks in focus

Woolworths is expected to provide a first-quarter trading update.

Sales and earnings results also are scheduled for Champion Iron, Mirvac and PointsBet. Production results are issued by Ampol, Beach Energy and Mineral Resources.

AGMs on are the schedule for Codan, Corporate Travel Management, Dexus, Helloworld Travel, Liberty Financial, National Storage REIT, St Barbara, Super Retail Group and Tabcorp.

What’s driving markets

“US stocks are rising on both resilient economic data as non-tech earnings impress across the board,” Oanda’s Edward Moya said in a note.

The Flash US PMI Composite Output Index came in at 51.0, up from September’s 50.2), reaching a three-month-high.

Chris Williamson, chief business economist at S&P Global Market Intelligence said: “Hopes of a soft landing for the US economy will be encouraged by the improved situation seen in October.”

S&P Global said US companies signalled “a marginal expansion in business activity” during October, following broadly stagnant output seen in August and September. “Manufacturers and service providers alike reported improved activity levels as the downturn in demand moderated. The rise in total output was the quickest for three months.”

Today’s agenda

Local: Third-quarter CPI at 11.30am.

Overseas data: German business climate survey October; US new home sales September

CPI expectations

TD Securities: “We expect September monthly CPI to edge slightly higher to 5.3 per cent year-over-year (consensus: 5.4 per cent, August: 5.2 per cent) given higher fuel prices and an increase in tobacco excise tax.

TD projects Q3 headline CPI at 1.0 per cent quarter-over-quarter (Q2: 0.8 per cent), same as consensus but slightly higher than RBA’s forecast at 0.9 per cent q/q and pins annual inflation at 5.1 per cent year-over-year.

“Acceleration in housing, utilities and transport cost are likely the main drivers of Q3 headline inflation. As for trimmed mean, we suspect price pressures have become more broad-based and could be very close to the headline at 1.0 per cent q/q, 4.9 per cent y/y, slightly higher than the RBA’s forecast.”

NAB’s view “has been that the inflation, and especially services inflation, would be stronger than the RBA had hoped through Q3, challenging their August forecasts.

“We expect a trimmed mean print of 1.1 per cent q/q .... We think such a print would challenge the pace of the RBA’s forecast disinflation, requiring an upward revision to near-term forecasts and see the Board acting on their tightening bias in November, where we expect a 25bp increase in the cash rate to 4.35 per cent.”

RBC Capital Markets: “We expect Q3 headline inflation to rise 1.1 per cent q/q … but against a slowing in y/y inflation to 5.3 per cent ... The q/q acceleration is unlikely to be repeated at the core level, and we see core inflation holding roughly steady at 1 per cent q/q across both trimmed mean and weighted median measures.”

United States

Yardeni Research on the US bond market’s tumult: “We agree with [Bill] Ackman and Jamie Dimon, CEO of JPMorgan Chase, who recently said, ‘This may be the most dangerous time the world has seen in decades.’

“There is too much outright danger in the current geopolitical environment for investor comfort. That favours risk-off trades over risk-on ones, for now.”

China boost

Bloomberg reported that China’s legislature approved a plan to raise the fiscal deficit ratio for 2023 to about 3.8 per cent of gross domestic product, the official Xinhua News Agency said Tuesday — well above the 3 per cent set in March which the government has generally considered a limit for the nation.

The plan includes issuing additional sovereign debt worth 1 trillion yuan ($US137 billion) in the fourth quarter to support disaster relief and construction.

China has rarely adjusted the budget mid-year, having previously done so in periods including 2008, in the aftermath of the Sichuan earthquake and in the wake of the Asian financial crisis in the late 1990s.

“The additional fiscal support approved today is the intervention we had been expecting and that was needed to prevent an abrupt fiscal tightening in China in the closing weeks of the year,” said Mark Williams, chief Asia economist at Capital Economics.

The budget changes came during a flurry of announcements from the Standing Committee of the National People’s Congress, the Communist Party-controlled parliament that oversees government borrowing.

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