18 OCT 21 – Monday Market Highlights – Transcript

SUMMARY KEYWORDS

week, prices, inflation, increased, market, released, november, economic, housing, taxonomy, costs, net, nuclear power, france, ipos, included, wealth, quarterly updates, data, expects

SPEAKERS

Roland Houghton

Roland Houghton 

Good morning. It’s Monday the 18th of October and I’m rolling from Milford. The key economic news was use inflation data which increased 0.4% month on month. energy prices continue to skyrocket and are up 25% year on year and 1% month on month. Food inflation also remains very high increasing 0.9% month on month and 4.6% year on year. core inflation which ignores these two measures also increased 0.2% month on month and is up 4% on the year. Now, as we’ve said in the past, it’s all very well to ignore food and energy inflation when analyzing the data. However, these are real world costs that families have to endure. We’d like to remove more transient factors when looking at inflation, such as vehicle prices, lodging costs any airline costs when backing these out, inflation increased 0.23% month over month. Us retail sales were also released increasing 0.7% month a month. First expectations have a 20 basis point decline. This likely puts more pressure on the Fed to begin tapering in November. Unsurprisingly, energy prices continue to grind higher globally, largely led by oil with crude oil up 3.7% last week, and Brent oil up 2.4% natural gas actually fell 2.6% coal also flatlined at record levels increasing only 0.6% last week. Uranium prices surged 20% last week largely on the back of a change in tune from French President Emmanuel Macron. France has been quite vocal about weaning themselves off nuclear power. However, Macron stated France will invest 1 billion euros in nuclear power over the next decade. nine other European countries including Poland and Finland are pushing for nuclear to be included in the European taxonomy framework by the end of 2021. The taxonomy defines which economic activities can be labeled as sustainable, which in turn would lead to more funding for that particular sector. Turning to equity news, the rising uranium prices so miners such as Paladin and chemica, increased by about 16% each last week. This takes a full year share price gains to 230% and 86% respectively, happened net wealth to Australian investment platforms released the quarterly updates with flows quite significantly exceeding market expectations have sort of 3 billion of net inflows for the quarter with net wealth reporting net inflows of 4 billion hub was up 21%. Last week on the back of its news with net wealth railing 25% cuantas had a busy week announcing the sale of land and mascot for $800 million to logos. The land was priced at a very high $6,000 per square meter highlighting how hot the industrial market is. This also resolved any lingering market concerns around cornices balance sheet. They also announced their plan to bring forward international flights in and out of New South Wales to the first of November from the previously planned 14th of November. Qantas was up 2% on Friday. Looking to the week ahead, it’s a bit quieter this week as it relates to official economic data releases. In the US industrial production will be released on Thursday with the market expecting 0.2% increase in production levels. You also have us building permits and housing starts to be released, which will give us an indication on how housing conditions in the US are holding up. The market expects building permits to fall by 2.4% and housing starts to remain flat month on month. We will continue to closely monitor the evolving energy crisis and we’ll continue to wade through the significant number of IPOs hitting the Australian market. Thanks for listening. We’ll see you next week.