Australia’s central bank, the Reserve Bank of Australia (RBA), has announced an increase in its key policy rate by 25 basis points to 4.35%, as expected by Reuters. RBA Governor Michele Bullock stated that while inflation in Australia has passed its peak, it remains too high and more persistent than anticipated a few months ago. Bullock expressed growing concerns that inflation may remain elevated for longer than previously anticipated. Australia’s inflation reached 5.4% year-on-year in September, according to official data. The RBA maintains its focus on returning inflation to its target within a reasonable timeframe.
Global freight rates are expected to face another challenging year in 2024, according to HSBC. The first half of 2023 already saw a decline in freight rates, and Parash Jain, head of shipping and ports and Asia transport research at HSBC, predicts that 2024 will be a tougher year for the industry. Although the coming holiday season and strong e-commerce demand out of Asia may provide some support to the air freight market, Jain believes it will not be enough to prevent a decline. Retailers are also unlikely to rush to stock up leading up to the holiday season. Jain’s outlook suggests continued difficulties in the global freight industry.
In October, China reported higher-than-expected growth in imports but a larger-than-expected decline in exports. China’s customs agency revealed that exports in U.S. dollar terms decreased by 6.4% year-on-year, worse than the estimated 3.3% drop. However, imports rose by 3% in U.S. dollar terms compared to the previous year, surprising analysts who predicted a 4.8% decline.
South Korea’s Kospi index experienced a 2% decline, mainly driven by energy and manufacturing stocks. This drop follows Monday’s gains, when the index recorded its best session since late March 2020 after the re-imposition of a ban on short selling. Energy and industrial stocks were the most affected, with shares of Kukdong Oil and Chemicals falling by 6.38%, Korea Petroleum Industries dipping by 5.95%, and Daesung Energy falling by 2.15%. Manufacturing companies such as Taeyang Metal Industrial and Aekyung Industrial also recorded losses.
CNBC Pro analysts have identified several growth stocks expected to experience significant jumps, potentially offering over 30% upside. Despite recent volatility in the stock market due to rising Treasury yields and concerns over a recession and high interest rates, stocks rebounded last week, with major averages recording their best performance of the year. The S&P 500 and Nasdaq Composite remain up around 15% and 29% respectively, year-to-date. CNBC Pro subscribers can access more information on these growth stocks.
ANZ economists forecast that the Reserve Bank of Australia will raise its cash rate by 25 basis points to 4.35% at the November policy meeting. Recent hawkish rhetoric from the bank and stronger-than-expected inflation data for the third quarter support this prediction. ANZ economists also do not expect any easing until the fourth quarter of 2024, with risks leaning towards further tightening in the near future.
Altcoins experienced gains following ether’s price surge to $1,900 over the weekend, the first time since July. Litecoin increased by 3.4%, Ripple’s XRP rose by 9.1%, and tokens tied to Polygon and Cardano advanced by 4% and 6% respectively in the decentralized finance sector. Uniswap also added 6%. Bitcoin and ether maintained stability after their weekend spikes, with bitcoin reaching the $35,000 level again and ether hitting $1,900. The rise in altcoins is seen as them catching up to bitcoin, a pattern observed in previous bull markets.
Goldman Sachs suggests that the recent policy adjustment by the Bank of Japan (BOJ) to increase flexibility on its yield curve control is positive news for the country’s banking sector. Analyst Makoto Kuroda notes that Japanese banks are expected to benefit from BOJ’s interest rate normalization. Some stocks are predicted to gain from this development.
Oil prices experienced a slight increase as Saudi Arabia and Russia announced their continued production cuts to support prices. Brent rose by 1.51% to $86.17 per barrel, while West Texas Intermediate increased by 1.73% to $81.90. Saudi Arabia revealed that it would continue to slash 1 million barrels per day until the end of the year, with its daily production standing at approximately 9 million barrels. Russia also committed to reducing crude and petroleum product exports by 300,000 barrels per day, with both countries reviewing their production cuts next month. Additionally, the market anticipates potential sanctions against Iranian oil exports, as the U.S. House of Representatives passed legislation to harden sanctions in response to recent conflict in the region.
BCA Research believes that the Federal Reserve is finished with further interest rate hikes. The research firm expects a recession to occur in the first half of next year and advises investors to prepare a defensive strategy. It already has an underweight position on equities and overweight position on fixed income for the next 12 months. BCA Research plans to align its tactical and cyclical recommendations in the near future.