March 28, 2022

28 MAR 2022 – Monday Market Highlights – Transcript

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Monday Market Highlights

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Roland Houghton
Good morning. It’s Monday, the 28th of March and I’m rolling from Milford. The key economic focus last week was on US Federal chair Jerome Powell speech postwhich. There could be no doubt we’re dealing with a very hawkish fed, he highlighted that inflation was much too high, and that the Fed would take the necessary steps to return the market to price stability. They mentioned the potential use of multiple 25 Bit rate hikes in a month, and that they could tighten beyond common measures of neutral and into a more restrictive stance. The US yield curve unsurprisingly shifted upwards at all key maturities with the three and five year yields increasing 25 basis points. The US 10 year moved to the highest level since May 2019. And the Aussie 10 year bond also moved higher, closing at 2.77% On Friday, the highest level since November 2018. Remember, when bond yields increase the actual price of the bonds fall. Despite what you’re generally considered to be a large headwind to equity markets. Global Markets were very resilient with the NASDAQ, s&p 500 and even our domestic indices all compounding last week’s gains ending up 1.5 to two and a half percent. US manufacturing PMI is a release which indicate the expansion or contraction in domestic manufacturing activity. The index significantly increased month on month to 58.5 Verse 56.3, expected indicating a strong rebound and activity post the Omicron impacted print we saw in January. Unfortunately, this wasn’t reflected in US sentiment with the University of Michigan’s closely followed Sentiment Index dropping to 59.4, the lowest reading in a decade. Interestingly, a third of consumers expect their overall financial position to worsen in the year ahead. The highest record since the survey began in 1940. In the UK, headline and core inflation accelerated to 6.2% and 5.2%, respectively, the highest levels since the early 90s. This was driven mainly by food, fuel and energy costs increasing and the headline metric came in ahead of 5.9% expected turning to equity news. The key was really just the strength and equity markets globally, particularly an unprofitable tech companies that have been sold heavily over the past few months. domestically. The lithium miners all had a fantastic week with Avi said minerals linetime resources, Pilbara minerals igvault and alkem all rallying 11 to 25% last week, till its pharmaceutical sold off 18% last week as a competing drug was approved by the FDA, causing analysts to cut their market share estimates. Unity group received another offer to buy the business this time by Myra, the Macquarie infrastructure fund that last year quiet focus group. The offer was all cash at $5 A share compared to Morrison and COEs $4.50 bid. Martin co also updated the exclusivity arrangement to include Brookfield asset management, Brookfield as the Canadian investment firm with approximately $690 billion of assets under management. Unity group remains in exclusivity with Morrison and Brookfield but claimed the board is reviewing the $5 offer by Myra, Unity close at $4.75 on Friday, turning to the week ahead in the US the PCE index for February be released, which is the Feds preferred measure of inflation. The market expects 6.1% Total PCE inflation and 5.5% core inflation. Also in the US, we will get the non farm payrolls data on Friday evening plus the change in average hourly earnings. The market expects 475,000 jobs be added and the unemployment rate to compress to a very tight 3.7%. Economists are also expecting wage inflation to accelerate to 5.5%. In China, their manufacturing PMI is to be released with the market expecting little change in conditions. domestically. There’s little economic news flow this week. But undoubtedly it will be an interesting week given the current economic and geopolitical climate. Thanks for listening. We’ll see you next week.

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