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S&P 500 and ASX Rally as Big Banks Drive Markets
Both the S&P 500 and ASX have rallied on the back of stronger-than-expected major bank earnings reports on both sides of the Pacific.
In the US, Bank of America reported a 31% year-over-year increase in earnings per share at $1.06, exceeding Wall Street's estimate of $0.95. Meanwhile, Morgan Stanley delivered a record-breaking quarter with EPS of $2.80, a nearly 49% increase from the same period last year.
On the Australian front, the benchmark ASX 200 leapt 1.03% to 8990.99, with all four major Australian banks playing a major role. CBA closed 1.45% higher, Westpac 1.98%, NAB 1.87%, and ANZ 0.53%.
These strong bank results indicate broader economic strength, despite recent concerns about US-China trade tensions. US Treasury Secretary Scott Bessent emphasised that Washington did not want to escalate trade conflict with China and noted that President Trump is ready to meet Chinese President Xi Jinping in South Korea later this month.
With the third-quarter earnings season just getting underway, these early positive results from financial institutions could prove as the start of continued market strength through to the end of the year.
U.S. Government Shutdown Likely to Last Into November
Washington remains gridlocked as the U.S. enters its 16th day of shutdown. With no signs of compromise on the horizon, it appears increasingly likely the shutdown will extend into November and could even compromise the Thanksgiving holiday season.
Treasury Secretary Scott Bessent has warned "we are starting to cut into muscle here" and estimated "the shutdown may start costing the US economy up to $15 billion a day."
The core issue driving the shutdown is healthcare policy, specifically the expiring Affordable Care Act subsidies. Democrats are demanding these subsidies be extended, while Republicans argue this issue can be addressed separately from government funding.
The Trump administration has taken steps to blunt some of the shutdown's immediate impact, including reallocating funds to pay active-duty soldiers this week and infusing $300 million into food aid programs.
However, House Speaker Mike Johnson has emphasised these are merely "temporary fixes" that likely cannot be repeated at the end of October when the next round of military paychecks is scheduled.
By the end of this week, this shutdown will become the third-longest in U.S. history. If it continues into November 4th, it will surpass the 34-day shutdown of 2018-2019 to become the longest government shutdown ever recorded.
This prolonged shutdown adds another layer of volatility to markets. While previous shutdowns have typically had limited long-term market impacts, the unprecedented length and timing of this closure, combined with its expanding economic toll, warrant closer attention as we move toward November.
Trump Announces Modi Has Agreed to Stop Buying Russian Oil
Yesterday, Trump announced that Indian Prime Minister Narendra Modi has agreed to stop purchasing Russian oil. He stated that Modi assured him India would halt Russian oil imports "within a short period of time," describing it as "a big step" in efforts to isolate Moscow economically.
The announcement comes after months of trade tensions between the US and India. In August, Trump imposed 50% tariffs on Indian exports to the US, doubling previous rates and specifically citing India's Russian oil purchases as a driving factor.
India has been one of Russia's top oil customers alongside China in recent years. Both countries have taken advantage of discounted Russian oil prices since the start of the Ukraine invasion.
Analysis suggests India saved between $2.5 billion to $12.6 billion since 2022 by purchasing discounted Russian crude compared to other sources, helping support its growing economy of 1.4 billion people.
Trump suggested that India's move would help accelerate the end of the Ukraine war, stating: "If India doesn't buy oil, it makes it much easier." He also mentioned his intention to convince China to follow suit: "Now I've got to get China to do the same thing."
The Indian embassy in Washington has not yet confirmed Modi's commitment. Markets will be closely watching for official statements from India and monitoring oil trading patterns in the coming weeks to assess the potential impact on global energy flows and prices.
Chart of the Day - Gold futures CFD (XAUUSD)
The Reserve Bank of Australia, (RBA) has increased the Country’s cash rate by half a percent to combat the rising inflation in its latest cash rate change. The increase was in line with most analyst’s expectations as the RBA continues to fight inflation and bring it back into the 2-3% range. The current forecast from the RBA suggests that CPI inflation will peak near 7.75% over 2022, before falling to 4% during 2023, and then settling at 3% in 2024.
A key source of concern for the RBA was and continues to be the current spending habits of Australian households. Importantly, as the cost of goods has risen due to inflation, pressure has built on household budgets and their spending habits. This has been caused by both the supply chain issues and the increased cash rate.
Furthermore, consumer confidence has fallen, and “housing prices are declining after the large increases in recent years.” This shows how interest rate hikes are impacting the lives of Australians and their spending habits. Another important factor at play is the tightening of the job market. The unemployment rate dropped in June to 3.5%, the lowest rate in 50 years, and job vacancies and job advertisements continue to be at high levels.
However, the bank does not expect to be able to hold these levels and predict the rate of unemployment will reach 4% by the end of 2024 as a result of the current slowing economic growth. In response to the announcement, the ASX200 responded positively as investors saw the announcement as bullish, shooting up 0.38% in the 30 minutes after the announcement. Conversely, the AUDUSD dropped back below $0.70 dropping to $0.6970 in the 30 minutes immediately after the announcement.
The RBA will later this week further update the market with its monetary policy statement which will provide further clarity on its decision-making and the current sentiment.
Qantas Airways Limited (QAN:ASX) is the flagship carrier of Australia and the country's largest airline by fleet size. The company has had a resurgence in 2022 and the share price has rebounded from the lows of the pandemic. The “Flying Kangaroo” as it’s known throughout the industry, said that it would report an underlying pre-tax profit of up to A$1.3bn (US$815mn) in the six months to December, doubling market estimates, as strong demand for flights offsets higher fuel costs and inflation.
The improved financial performance has come from the company transferring the increased costs via increased fairs. The share price for the airline soared to $5.83, its highest level since November 2021, on the back of the strong profit forecast. Qantas’s pre-pandemic share price was sitting at $7.35 AUD and saw its financial performance suffer with 3 consecutive years of more than A$1bn losses because of pandemic restrictions and lost A$25bn of revenue during the period.
Net debt, which spiralled to almost A$6.5bn during the pandemic, is expected to fall to between A$3.2bn and A$3.4bn by the end of the year, well below the airline’s A$3.9bn target range. Alan Joyce, Chief Executive gave a promising statement on the company’s performance advising, “It’s been a really challenging time for the national carrier, but today’s announcement shows how far we’ve come. Since August, we’ve seen a big improvement in our operational performance and an acceleration in our financial performance.” The report in profits has come too late for investors to receive a final dividend this year, with the company deciding not to reverse its decision to halt dividend payments.
However, it’s not all doom and gloom for investors, as Alan Joyce has led a A$400mn share buyback this year. Share buybacks do not put cash in the hands of investors as a dividend does. However, they do support shareholders by reducing the overall share count.
This tends to boost the share price, given that under the laws of supply and demand, less supply leads to a rise in price. If you are interested in venturing into trading stocks, FX or commodities, you can create access to one of our MetaTrader 5 trading CFD platforms with GO Markets here or call our Melbourne based office on 03 8566 7680 to discuss your trading goals with our account managers and to get started. Sources: https://www.ft.com/, https://au.finance.yahoo.com/, https://www.fool.com.au/
Oracle Corporation reported its fiscal 2022 third quarter financial results after the closing bell on Wall Street today. The US software and hardware manufacturer reported revenue of $10.513 billion vs. $10.506 billion expected. Earnings per share at $1.13 per share, falling short of analyst estimate of $1.18 per share.
The company also announced a quarterly cash dividend of $0.32 per share of outstanding common stock "In Q3, Oracle delivered over 7% constant currency revenue growth—our highest quarterly organic revenue growth rate since we began our transition to the cloud," said Oracle CEO, Safra Catz following the latest results. "This strong top line growth was coupled with a solid non-GAAP constant currency operating profit growth of 4%, but the big story is that our overall revenue growth is being driven by both our rapidly growing Cloud Infrastructure and Cloud Applications businesses. Q3 Cloud Infrastructure revenue was up 47% in constant currency. Q3 Cloud Applications growth was led by Fusion ERP, which was up 35% in constant currency and NetSuite ERP which was up 29% in constant currency.
Total Cloud revenue which includes Cloud Infrastructure and Cloud Applications is now over $11 billion a year," Catz added. Oracle Corporation (ORCL) Shares of Oracle were little changed at the end of trading on Thursday, up by 0.84% at $76.70 a share. Here is how the stock has performed in the past year – 1 Month: -6.22% 3 Month: -13.53% Year-to-date: -11.98% 1 Year: +13.87% Oracle is the 49 th largest company in the world with total market cap of $204.85 billion.
You can trade Oracle Corporation (ORCL) and many other stocks from the NYSE, NASDAQ, HKEX and the ASX with GO Markets as a Share CFD. Trading Derivatives carries a high level of risk. Sources: Oracle Corporation, TradingView, MetaTrader 5, CompaniesMarketCap
Oil has continued its tumble from its March 2022 high of $131 per barrel down to $82 a barrel. The drop has been in response to weak economic figures from China and the USA which has added to the recessionary anxiety gripping the market. Furthermore, as Iran edges closer to a nuclear deal, the removal of economic sanctions on the country may be able to provide 2.5 million barrels a day to the global supply.
The drop has also coincided with a rebound in equities as the possibility that central banks may soften their aggressive interest-raising regime has entered the market. Further industry data released from the USA outlining their Crude stockpiles due later on Tuesday, may also impact the price in the short term. The recent drop has pushed the price of both Crude and WTI to 6-month lows not seen since before the Russia and Ukraine crises.
On the daily chart, both Brent and WTI are sitting on areas of support between $85-$93 and $83-$90 respectively. The price for both Brent and WTI has also dipped below the 200-day moving average indicating a medium-term bearish shift. The question remains, is this just a retracement, or a reversal of exhaustion?
Due to the prices being resting near their area of support and the RSI consolidating between 25-45, this does indicate a possible bounce. If the RSI can break above the recent consolidation/range or 45 and the general price of the commodity can bounce off its support, there may be the potential for buying opportunities. With any trade and especially those involving commodities, there are always external risks to consider that may invalidate the current trading strategy.
For instance, if inflation becomes less of an issue and central banks begin to taper their aggressiveness in fighting inflation, the price of oil may begin to slip. Therefore, this is a trade that can in which the utilisation of both technical and fundamental analysis can be done.
NIO Inc. (NIO) reported its latest delivery numbers for February on Tuesday. The Chinese electric vehicle company delivered 6,131 cars last month – an increase of 9.9% year-over-year. The deliveries in February consisted of: 1,084 ES8s – the company’s six-seater or seven-seater flagship premium smart electric SUV 3,309 ES6s – the company’s five-seater high-performance premium smart electric SUV 1,738 EC6s – the company’s five-seater premium smart electric coupe SUV NIO has delivered a total of 182,853 electric vehicles as of 28 th February, 2022.
NIO Inc. (NIO) Shares of NIO were down by 4.25% at the end of the trading day on Tuesday at $21.87 per share. Here is how the stock has performed in the past year – 1 Month: -11.96% 3 Month: -44.11% Year-to-date: -30.97% 1 Year: -49.48% NIO is the 15 th largest automaker in the world with a market cap of $34.78 billion. You can trade NIO Inc. (NIO) and many other stocks from the NYSE, NASDAQ, HKEX and the ASX with GO Markets as a Share CFD.
Sources: NIO Inc., CompaniesMarketCap
Moderna Inc. (MRNA) reported it latest financial numbers before the opening bell in the US on Thursday. The pharmaceutical company reported results that beat Wall Street estimates, sending the stock price higher on the day. Total revenue reported at $7.211 billion in the fourth quarter vs. $6.798 billion expected.
Earnings per share at $11.29 per share vs. estimate of $9.96 per share. Stéphane Bancel, CEO of Moderna commented on the last year’s performance following the latest results: "In 2021, we delivered 807 million doses with approximately 25% of those doses going to low- and middle-income countries, and we will continue to scale in 2022 to help end the COVID-19 pandemic. Moderna has experienced exponential growth and we have more than doubled the size of our team over the last year with a global team of 3,000.
We also have announced plans to scale to 21 commercial subsidiaries across the world, including four new locations in Asia and six new locations in Europe. We continue to expand and advance our industry-leading mRNA pipeline with 44 programs in development. We look forward to clinical readouts from our therapeutics development candidates later in 2022 in rare genetic diseases and oncology.
We are entering 2022 with a remarkable team and strategic priorities to continue advancing mRNA vaccines and therapeutics to impact human health." Moderna Inc. (MRNA) chart (Weekly) Share price of Moderna surged by over 10% during Thursday, trading at $147.53 per share. Here is how the stock has performed in the past year – 1 Month: +0.18% 3 Month: -45.54% Year-to-date: -41.38% 1 Year: +0.34% Moderna Inc. is the 274 th largest company in the world and 21 st largest pharmaceutical company with a total market cap of $59.54 billion. You can trade Moderna Inc. (MRNA) and many other stocks from the NYSE, NASDAQ, HKEX and the ASX with GO Markets as a Share CFD.
Sources: Moderna Inc., TradingView, MetaTrader 5, CompaniesMarketCap