Weekly Market Update | 13 November 2023

 

Key economic releases last week

  • ANZ Australian job ads fell 3% MoM.
  • RBA hiked rates from 4.1% to 4.35% as expected and “will not hesitate to raise the cash rate further if there is a material upward revision to the outlook for inflation”.
  • China trade data was mixed as exports fell 6.4%, worse than expected, while imports rose 3%, better than expected.
  • China fell back into deflation as CPI fell 0.1% MoM or 0.2% YoY while PPI fell 2.6%.

Key releases for the week ahead

  • Westpac Consumer Sentiment and NAB Business Confidence surveys
  • Australian employment data
  • US inflation data
  • US retail sales
  • EU inflation data
  • China fixed asset investment, industrial production, retail sales and unemployment
  • China loans data

Chart of the week

There are several key economic releases this week including domestic employment but US inflation will likely remain the key driver for markets, especially since inflation has started to tick back higher and remain at levels that are above the US Federal Reserve’s target.

Listed companies have largely been shielded from rate hikes thus far as many raised capital during COVID at record low rates for longer terms. The economic and earnings strength over 2021 and 2022 also helped cash flows, meaning that companies had to rely less on financing from debt issuances. However, the impact of higher rates may finally be making their way to listed companies as profits and cash flows moderate, and debt starts to come up for renewal.

 

 

 

 

 

 

 

 

 

 

 

 

 

References to financing costs have moved sharply higher in the US Q3 earnings season. This is already evident in some longer duration industries with a need for ongoing financing such as renewable energy where a significant rise in costs is threatening the viability of many developments.

We have seen earnings expectations move lower during this earnings season and remain cautious of the long and variable lags of monetary policy tightening. As a result, we continue to focus on quality companies with solid balance sheets.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Monday 13 November 2023, 10.30am

For more information on the above please contact Bentleys Wealth Advisors directly or on +61 2 9220 0700.

This information is general in nature and is provided by Bentleys Wealth Advisors. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decision based on this information.