US equity markets have started the week in the red, with the S&P500 trending steadily lower throughout Monday’s trading session. Energy and Information Technology stocks were the worst performers, with the sectors down -2.29% and -1.94% respectively.
United States
By the close of the session, the S&P500 was down 1.30% at 4017.77, the Nasdaq100 was 2.1% lower at 11,912.39, while the Dow Jones Industrials dipped -0.77% at 33,717.09. Traders and investors are looking towards the Fed Open Market Committee (FOMC) meeting on Thursday morning Sydney time, where they are expected to lift official interest rates by a further 0.25%, taking the policy rate to 4.75%. The Fed funds rate has not been this high since late 2007, just before the onset of the GFC. Furthermore, many of the large tech companies, including Apple (AAPL), Alphabet (GOOGL), and Amazon (AMZN) are due to release their 2022 Q4 earnings before the market opens on Thursday the 2nd, which depending on results will have a significant impact on both the Index and sentiment in general. The VIX Index jumped 7.7% to close at 19.94, while the yield on 10-year treasuries advanced four basis points to 3.54%.
Europe
In Europe, equity markets were slightly weaker, with the Euro Stoxx 50 down 0.46% to 4,158.63, while the German Dax dipped 0.16% to close at 15,126.08. The FTSE100 in the UK bucked the trend to close 0.25% higher at 7,784.87, led by the Consumer Staples sector, which gained 0.88%. UK equities have outperformed their global peers over recent months, with prices recently rallying to new highs, to completely retrace the declines from 2022. See the chart below. Spanish inflation jumped unexpectedly, coming in at 5.8%, well above market expectations of 5.0%.
FTSE100 – Daily Chart
*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.
Australia
To the Aussie market, the ASX200 closed marginally lower on Monday, down 12.18 points (-0.16%) at 7,481.65. Top performers from the ASX200 were Core Lithium (CXO, +8.9%), Novonix (NVX, +7.5%), and Lynas Rare Earths (LYN, +6.9%). Paladin Energy (PDN) also had a strong session, rallying 6.8% to close at $0.86. The weekly chart for PDN is looking very interesting at present, with a very large triangle consolidation pattern currently forming. A break above the upper trendline, currently at around $0.90 would signal a breakout from a technical perspective, increasing the likelihood of a strong trend to the upside. Despite the falls in the US, ASX SPI200 futures have held up well in overnight trading, declining just 5 points (-0.07%) to close at 7,422, suggesting a flat start to trade on Tuesday.
Paladin Energy (PDN) – Weekly Chart
Commodities
Energy prices were weaker on Monday, led by a 6.4% fall in natural gas prices, while WTI and Brent Crude Oil were down 4.7% and 3.8% respectively. Spot Gold prices finished the session at US$1,923 an oz, down 0.24%, while Palladium jumped over 1.1%. Grain prices were firmer across the board, led by soybeans, which lifted 1.6% to US$15.33 a bushel. The US Dollar Index gained 0.2%, the Euro fell 0.2% to 1.0847, the British Pound fell 0.3% to 1.2349, and the Australian dollar closed at 0.7061.
Economic Data: Tuesday 31st January
Japan: Unemployment Rate (Dec) 10.30am
Japan: Industrial Production YoY (Dec) 10.50am
Australia: Housing Credit MoM (Dec) 11:30am
Australia: Retail Sales MoM (Dec) 11:30am
China: NBS Manufacturing PMI (Jan) 12.30pm
France: Inflation Rate YoY (Jan): 6:45pm
Germany: Unemployment Rate (Jan) 7:55pm
Euro Area: GDP Growth Rate (Q4) 9:00pm
This article was written by Oliver Gordon, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
