FIVE at FIVE AU: ASX edges higher as oil prices fall and US Treasury yields slide
Proactive Investors
Published Nov 08, 2023 16:06
Updated Nov 08, 2023 16:30
FIVE at FIVE AU: ASX edges higher as oil prices fall and US Treasury yields slide
The ASX edged 0.18% higher today, adding 12.6 points to 6,989.70 and returning to similar levels to January this year.
Weaker-than-expected Chinese trade data weighed on the commodities sector, with mining giants taking a beating - Rio Tinto (ASX:RIO) fell 2.05%, BHP (ASX:BHP) 2.36% and Fortescue (ASX:FMG) Metals 1.31%.
The Optus outage put the wind to Telstra’s sales, bumping the telco’s stock up 1.81% in trading today.
Oil continued its downward slide, alongside just about every commodity under the sun on the Australian bourse. West Texas crude slipped 4.68% with palladium falling 4.84% in tandem.
The sectors were more optimistic, with only Materials (-1.31%) and Energy (-0.20%) falling while Information Technology (+1.81) led the way up, followed by Comm Services, Real Estate and Industrials, which all gained more than 1%.
Falling Treasury yields, tumbling oil; faltering AUD
Capital.com senior financial market analyst Kyle Rodda offers insights into several market movements - Wall Street driven higher by falling US Treasury yields, oil prices falling on global growth pessimism and a decline in AUD/USD after the most recent RBA rate hike.
“The Treasury curve bull flattened last night in a continuation of last week’s move. The meaningful drop in long-term rates has made equity valuations more attractive at the margins, especially in US tech stocks,” Rodda said.
“The NASDAQ ripped higher and the S&P 500 a confluence of resistance in a move boasting the hallmarks of an end-of-year ‘Santa Rally’.
S&P500.
“Fed governor Christopher Waller talked up the upside risks to inflation going forward, following recent GDP data.
“However, futures pricing indicates that the markets think the Fed is finished with rate hikes.
“There is tangible concern about a more significant slowdown in growth emerging, which is putting downward pressure on yields and, more pertinently, weighing on commodity prices.
“Oil broke through technical support last night to extend a move that began with the previous week's tepid US data and was compounded by soft Chinese trade data yesterday.
“Lower energy prices temper the inflationary pulse and allow for a revision in rate expectations. That takes pressure off equities in the short term and signals pressure on corporate profits.
“Growth-sensitive stocks could take their cue from Wall Street's bullish lead.
“Australian markets are still digesting yesterday's RBA hike, with softer forward guidance leading to the pricing out of further hikes. The AUD/USD has pulled back towards the low 64-cent mark.”
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