24 OCT 2022 – Monday Market Highlights – Transcript

Nick Morgan
Good morning. It’s Monday the 24th of October and I’m Nick from Milford. Looking at the key economic news from last week, starting in the UK. Last Thursday, Liz trust resigned as British prime minister after only six weeks in the role as an economic program brought turmoil to financial markets and increase living costs. The Conservative Party will elect a new leader by the 28th of October. And according to bookmaker numbers, the current front runner is Rishi Sunak. We also had UK CPI out last week, rising to 10.1% in September from 9.9 in August and head of market expectations of 10%. This is over five times the Bank of England’s target of 2%. And the market is now pricing a touch under 100 basis points for the hike next month. Move into the US with the NA HB housing market index out which fell for the 10th straight month to 38 below consensus of 43. This is evidence of a deteriorating housing market in the US, which is unsurprising given the sharp rise in 30 year mortgage rates closer to home were the ended CPI out on Tuesday, coming in at a very elevated 2.2% quarter on quarter, a hit of market expectations at 1.5% and the RBNZ had forecast of 1.4%. The biggest surprise was if is up 20% for the quarter, it’s likely the RBNZ will revise upwards their CPI and OCR projections in the November monetary policy statement. And the market is now pricing in a 75 basis point hike at the November meeting. Finally in Australia, we had the RBA minutes out for the October meeting. They justified the smaller rate hike due to the rapid pace of previous hikes in such a short period of time, and noted that the full effects of these hikes still remains to be seen. They continue to reiterate their commitment to achieving the inflation target, pointing towards further hikes to come. The September employment data was also out last Thursday, with total employment up 0.9 1000 softer than the 25,000 expected and lower than the 33.5 1000. In August. Both the unemployment and participation rates were flat month on month. Turning to equity news. We are in the midst of reporting season here in Australia. And although it’s still early days, it is worth noting that companies missing guidance are being punished. And companies who are beating guidance are seeing a more muted reaction. We had both Santos and Woodside report last week, Sandoz had a strong quarter with production in line and guidance unchanged. Woodside also had a strong quarter ahead of expectations and upgraded guidance for 2022 production on Monday at Bri announced an underlying profit downgrade to the range of 75 to 85 million, citing inflationary pressures, compressing margins and the impact of weather conditions. They also announced the departure of CEO Nick Miller and the appointment of interim CEO Mark Irwin, the stock was down 21% off the back of this news. In the US we had Netflix report their q3 earnings on Tuesday, beating both top and bottom line expectations. They reported adding 2.4 1 million subscribers in the quarter above forecasts of 1 million. Netflix also announced that they will begin to crack down on Password sharing next year and the stock rallied 14%. On the back of this result. Tesla reported mixed q3 earnings last week revenue and gross margin messes with a key areas of disappointment. While they noted the energy storage business having a strong quarter must predict it a strong q4 and noticed the potential for five to $10 billion worth of stock buybacks next year. Finally, in New Zealand Auckland Airport raised the FY 23 impact guidance from 50 to 100 million to 100 to 130 million off the back of increased passenger volume expectations. Looking to the week ahead, we have the Australian CPI out on Wednesday, which would be a key piece of data to watch given the RBA is recent pivot the mark is expecting 6.9% year on year, up from 6.1% in the previous quarter. We also have the European Central Bank interest rate decision next week. The market is pricing a 97% chance of a 75 basis point hike. Finally we have US GDP and personal spending data out on Friday. This will give a good read on the health of the consumer in the US. Thanks for listening. We’ll see you next week.