Inflation data too strong for stock markets to sustain momentum – ShareCafe

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Shares fell on Friday, capping a volatile week of trading, a day after posting a historic rally. Early gains were erased following the Michigan consumer sentiment report which showed a rise in one-year inflation expectations for the first time in seven months and came after the hotter CPI report than expected from Thursday. Both reports added skepticism to the momentum of peak inflation and support the recent Fedspeak which continued to push a hold and hold narrative until inflation falls significantly.

In the UK, just over a month after Truss took office promising a new radical Conservative and tax-cutting government, Britain’s Prime Minister now faces political ruin, his flagship economic policy rejected by the markets, voters and its own MPs. Its chancellor was the first casualty after its debt-fueled ‘mini’ budget sent markets panicking.

On Friday, the Dow Jones Industrial Average fell 403.89 points, or 1.34%, to end the day at 29,634.83. However, the index rose by 1.15% over the week. The S&P 500 fell 2.37% to 3,583.07 and posted its seventh negative close in eight days. The Nasdaq Composite slid 3.08%, ending the day at 10,321.39, weighed down by losses from Tesla and Lucid Motors, which were down 7.55% and 8.61% respectively.

At the same time, bond yields soared, with the 10-year US Treasury yield rising above 4% for the second time in two days as investors reacted to higher inflation expectations.

In corporate news, reporting season kicked off with U.S. banks — JPMorgan shares rose 1.7% after the bank reported a less severe third-quarter revenue decline than expected the analysts. Shares of Citigroup and Wells Fargo also rallied following their third-quarter results, but Morgan Stanley fell 4.8% on lower investment banking fees.

America’s biggest banks are taking advantage of the Federal Reserve’s campaign to raise interest rates, charging more for consumer loans and business lines of credit without offering customers significantly better rates on deposits.

And 91-year-old Rupert Murdoch is back on his way to merging Fox with News Corp, a deal that would bring together the TV group behind cable channel Fox News with the owner of newspapers including The Wall Street Journal.

Across all sectors, safe-haven status was very limited, with the fall in the price of oil again putting pressure on the energy sector.

The best performing industry was travel and banking stocks, while electric vehicle chargers, lithium and hydrogen stocks struggled.

On the currency front, sterling’s weakness remains the big FX story – with UK companies now very attractive from a valuation perspective to US rivals, as a US capital executive said this week. -investment “everything in the UK is for sale”. British companies are much cheaper than a few weeks ago, and traders expect a recovery in UK mergers and acquisitions to be triggered by the weak pound. The same could happen in Australia given the lower $A.

Currencies

An Australian dollar at 7:15 a.m. weakened against the US dollar on Friday, buying 62.15 US cents (Fri: 62.95 US cents), 55.38 British pence, 92.36 yen and 64.08 US cents. ‘euro.

Goods

Iron ore futures point to a 1.5% decline.

Gold lost $28.10 or 1.7% to US$1,649 an ounce.

Silver fell $0.85 or 4.5% to US$18.07 an ounce.

Copper fell $1.70 or 0.5% to US$342.35 per pound.

Crude lost $3.50 or 3.9% to US$85.61 a barrel.

Futures contracts

SPI futures point to a 1.5% decline.

Numbers around the world

Across the Atlantic, European stock markets closed higher. Paris gained 0.9%, Frankfurt gained 0.7% and London’s FTSE closed up 0.1%.

In Asian markets, Tokyo’s Nikkei gained 3.3%, Hong Kong’s Hang Seng gained 1.2% and China’s Shanghai Composite gained 1.8%.

On Friday, the Australian stock market gained 1.8% to close at 6759.

Ex-dividends

Cadence Capital (ASX:CDM) pays 4 cents fully franked
CDO Opportunity Fund (ASX:CDO) pays 7.5 cents fully franked
Future Gen Ltd (ASX:FGX) pays 3.25 cents fully franked
WAM Active Limited (ASX:WAA) pays 3 cents fully franked
WAM Capital Limited (ASX:WAM) pays 7.75 cents fully franked
WAM Alternative (ASX:WMA) pays 2 cents fully franked

Dividends payable

Carsales.com Ltd (ASX:CAR)
Cochlear Ltd (ASX:COH)
Garda Property Group (ASX: GDF)
SKS Technologies Group Ltd (ASX:SKS)
Super Retail Group Ltd (ASX:SUL)

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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