13 FEB 2023 – Monday Market Highlights – Transcript
Monday Market Highlights 13 February 2023
Good morning, its Monday the 13th of February and I’m Nick from Milford.
Looking at the key economic news from last week, on Friday we had initial jobless claims out in the US coming in at a higher-than-expected 196k, compared to market forecasts of 190k. This is the first time in 6 weeks that Americans filing for unemployment benefits has increase.
We had the preliminary University of Michigan consumer sentiment survey out late in the week coming in at 66.4 up from 64.9 last month and better than the expectations of 65. Looking deeper at the sub index’s, current economic conditions improved to 72.6 up from 68.4, however consumer expectations fell to 62.3 form 62.7 in January. Year ahead inflation went up to 4.2% from 3.9%, while the five-year inflation outlook remained steady at 2.9%.
We also various US central bank speakers throughout week including FED chair Jerome Powell. A consistent message was spoken across many of the committee members with inflation still elevated and further hikes to come.
Moving closer to home, The RBA had their February meeting on Tuesday where they raised the official cash rate by 25bps to 3.35% in line with consensus. The surprise to the market was the hawkish commentary accompanying the rate hike, signalling for further rate hikes over the months ahead with a reduced dependence on data to shift this view in the near term. The hawkish commentary has seemingly locked in rate hikes for both March and April, while May looks to be the appropriate point to reassess.
The Statement on monetary policy was out on Friday and GDP growth, unemployment and inflation forecasts were little changed. Inflation is still forecast to be 4.7% by the end of 2023 and its expected that inflation will be back within the target range of 2-3% by 2025. The RBA continued to emphasise the risk of a wage growth spiral in such a tight labour market and that they will monitor this issue closely.
Turning to equities, reporting season has kicked off domestically with 27 companies reporting so far and 68 to report this week.
We had REA, an online real estate advertising company report their 1h results for FY23. Earnings came in slightly ahead of consensus, but cautious guidance was given on the outlook.
We also had a number of REIT names report throughout the week including Mirvac, Region group and BWP, all coming in broadly in line with consensus.
In the US reporting season continued, a company of note was Walt Disney who reported a strong result and outlined plans to improve profitability by cutting $5.5b in costs. This cost cutting included plans to eliminate 7,000 jobs, adding to the list of companies laying off workers amid global economic uncertainty.
An interesting company development last week was Googles parent Alphabet releasing their latest AI technology. The internally developed technology, was unveiled on Tuesday and produced a factual error in the demo, causing over $100b to be wiped off Alphabets market cap, down 9% by Wednesday.
Looking to the week ahead we have a very busy week with both reporting season ramping up here in Australia and raft of economic data globally.
Starting in the US we have the January inflation print out on Wednesday with consensus at 0.4% m/m up from 0.1% in December. We also have retail sales out on Thursday another important data print to get a gauge on the consumer. The market is forecasting 1.6% m/m up from -1.1% in December.
IN the Uk we have the employment data out on Tuesday and the inflation data out on Wednesday, with the market forecasting unemployment to stay flat at 3.7% and for inflation to decrease to -.4% m/m.
Here in Australia we have the employment data out on Thursday, an important print that the RBA will be watching very closely. We also have the Westpac consumer confidence survey out and RBA governor Lowe speaking during the week.
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