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ASX futures flat Wall Streets five-week streak ends

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Summary
  • ASX Futures down 3 points, or flat, to 7435 points. On Friday, the benchmark S&P/ASX200 gained 0.8%, thanks to a rebound in materials stocks
  • On Wall Street on Friday the S&P 500 gained 0.7%, the Dow Jones gained 0.5%, and the Nasdaq outperformed with a rise of 1%
  • Oil prices have taken a breather with Brent crude down 0.8% to $US82.17 a barrel, and US oil down 1% to $US80.79 a barrel
  • Iron ore gained 3.1% over the weekend to $US89.69 a tonne
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  • Australian businesses have warned the bottlenecks choking global supply chains are unlikely to be resolved soon, amid predictions soaring shipping costs will add to inflation by lifting the price of imports.

    With global markets fixated on the risk that higher inflation could raise interest rates from record lows, companies including telecommunications giant Optus, explosives maker Orica, and Boost Juice owner Retail Zoo have underlined the severe disruption to supply lines.

    Optus CEO Kelly Bayer Rosmarin: “Supply shortages are still very much afoot and are expected to continue for a while.”

    Optus CEO Kelly Bayer Rosmarin: “Supply shortages are still very much afoot and are expected to continue for a while.” Credit:Dominic Lorrimer

    The supply chain problems, which are leading to widespread shortages and delays in the delivery of goods, come as many companies are also facing wage pressure as they scramble to find staff.

    Optus chief executive Kelly Bayer Rosmarin said there had been shortages of iPads, Google’s new phone, and radio and networking equipment.

    “Supply shortages are still very much afoot and are expected to continue for a while,” Ms Bayer Rosmarin said. “Those supply shortages mean, for example, we keep selling all of our stock of iPads and not having enough to sell customers,” Ms Bayer Rosmarin said in an interview with The Sydney Morning Herald and The Age.

    “The new Google phone - there were worldwide shortages of that - and then the same goes for our radio and networking equipment where we’ve got an order ahead of time to secure our supply. I think the supply chain chip shortage problems are not anywhere near resolved.”

    The problems in global supply chains - which are being caused by congested ports, COVID-19 disruptions, and a surge in demand - are just one reason for the rise in inflation.

    Orica chief executive Sanjeev Gandhi highlighted the broad range of pressures on costs, saying he believed inflation would remain a key issue for businesses.

    “Inflation is all over the place... We see energy inflation, we see inflation in supply chain costs, we see inflation in our input costs, we see labour cost inflation. So, inflation is a massive challenge, and that’s something I expect will continue,” Mr Gandhi said following the company’s recent financial results.

    Read the full story here

  • ASX futures down 3 points to 7435 on Saturday
  • Australian dollar -0.1% to 73.25 US cents at 6.56am AEDT
  • Wall Street: S&P 500 +0.7%, Dow Jones +0.5%, Nasdaq +1%
  • Europe: Stoxx 50 +0.3%, FTSE -0.5%, DAX +0.1%, CAC +0.5%
  • Bitcoin -0.6% to $US64,024.62 on Bitstamp at 6.44am AEDT
  • Spot gold +0.2% to $US1864.90 per ounce
  • Brent crude -0.8% to $US82.17 a barrel
  • US oil -1% to $US80.79 a barrel
  • Iron ore +3.1% to $US89.69 a tonne
  • 10-year yield: US 1.56% Australia 1.79% Germany -0.26%

    • Wall Street stocks closed higher on Friday in New York, with market-leading growth shares kick-starting indexes’ climb as investors looked past disappointing US economic data.

    Despite their advances, all three major US stock indexes ended the session below last Friday’s close, ending a five-week streak of weekly gains.

    Investors favoured growth over value, with megacap tech stocks, led by Apple and Microsoft, doing the heavy lifting.

    The S&P 500 gained 0.7 per cent, The Dow Jones rose 0.5 per cent and the Nasdaq added 1 per cent. Despite the positive lead, the Australian sharemarket is set to edge lower with futures pointing to a dip of 3 points at the open.

    The University of Michigan’s preliminary US consumer sentiment data for November unexpectedly dropped to a 10-year low, and a Labor Department report showed job openings barely budged from record highs even as workers are quitting in record numbers.

    “Markets drifted higher today despite a very weak consumer sentiment report, as inflation seems to be hurting consumers more than corporate profits,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York.

    The souring mood of the consumer could be worrisome to retailers as the holiday shopping season draws near, and is likely to draw intensified scrutiny to upcoming retail earnings reports.

    Walmart Inc, Target Corp, Home Depot Inc and Macy’s Inc are among the high-profile retailers expected to report next week.

    “Investors will be focused on guidance from retailers to determine if inflation will crimp profit margins or if costs can be passed through,” Carter added.

    Tesla dropped 2.8 per cent on news that chief executive Elon Musk has sold an additional $US700 million ($955 million) in stock in the next chapter of a saga that began with Musk’s infamous Twitter poll on whether he should offload shares in the company he founded.

    Read the full wrap here

    Hello, Good Morning, and welcome to the start of another trading week.

    The editors today are Colin Kruger and Lucy Battersby.

    There is not much Australian economic data coming out until Wednesday. But senior RBA staff are appearing at a House of Reps Committee on tax and revenue in Canberra today, and its minutes are out tomorrow.

    This blog is not intended as financial advice.

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