Daily Dose of financial insights for investors and traders; Apple skids 5% in three days, Australian inflation slows more than expected, coal stocks surge

Daily Dose of financial insights for investors and traders; Apple skids 5% in three days, Australian inflation slows more than expected, coal stocks surge

Jessica Amir
Market Strategist

Summary:  Daily Dose of financial insights for investors and traders; Apple skids 5% in three days what could be next. Australian inflation slows more than expected, what this mean for interest rates and the Aussie dollar. Coal stocks surge to record highs.

The major US indices, the Nasdaq 100 (NAS100.I) and S&P 500 (US500.I) continue to retreat

The major US indices closed on the back foot again as investors continue to weigh the deteriorating Covid developments and increased restrictions in China, while also awaiting Federal Reserve Chair Jerome Powell’s speech later Wednesday. Powell’s will likely underscore the Fed’s desire to keep interest rates at elevated levels until inflation eases. And it’s fair to say that this double blow, of persistent inflation and rising interest rates is denting sentiment. The latest US consumer confidence reading (released Tuesday) for November showed US consumer confidence fell to a four-month low. The biggest drag on US markets on Tuesday, were technology companies with Apple shares continuing to slide. While some travel companies shares saw some stellar gains, with Carnival Cruise (CCL) shares rose almost 5% after announcing Cyber Monday bookings volumes were 50% higher than Cyber Monday 2019. And Norwegian Cruise Line Holdings (NCLH) shares followed higher on the sentiment boost.

Apple (AAPL) shares fell 2.1%, continuing their three day pull back, which totals almost 5%

...on the back of the covid lockdown fallout in China. Apple relies heavily on the key manufacturing hub of Zhengzhou, which is now in lockdown. And as a result Apple’s production shortfall could be close to 6 million iPhone Pro units this year (this is according to people who know about Apple’s assembly operations). These reports are swirling at a time when Apple previously dropped its overall production target to about 87 million units (down from the prior 90 million estimate) on the back of demand slowing. However, Apple and the Foxconn facility are allegedly planning to make up the shortfall in lost output in 2023. However, looking at Apple shares from a technical perspective, its trading 8% lower than its 200 day moving average and the indicators suggest Apple shares could see further downward pressure - as suggested by the weekly and monthly charts.

Australia’s ASX200 (ASXSP200.1) rises 0.3% mid-session, which brings the market closer to its record high, that it's just 4.5% away from 

What is supporting the Aussie market rally on Wednesday, is firstly - weaker than expected inflation data was released, which gives the RBA room to remain dovish and only rise rates by 0.25% next week. Secondly, ahead of the northern hemisphere winter, coal shares are trading considerably higher, trading at new record highs, with Whitehaven Coal (WHC) up 7.3% to $9.34 and New Hope Coal (NHC) up almost 6% to $5.88. Trimmed mean CPI (which excludes volatile items), showed consumer prices rose 5.3% year-on-year in October, which means that prices of goods and services in Australia are falling, compared to the prior read (5.4% YoY). This also shows price rises are not as bad as feared (Trimmed CPI was expected to rise 5.7%). Meanwhile, headline inflation also rose less than expected, up 6.9% YoY, which was cooler than prior read (7.3%), and less than the 7.6% expected. Remember, this follows a suite of Australian economic data that supports the RBA remaining more conservative with rate hikes ahead. Earlier in the week, Australian retail trade data unexpectedly fell, showing consumers are feeling the strain of inflation and rising interest rates. So where to from here? We think spending will likely continue to slow into 2023, as the full impact of rate hikes passes through households, with some under financial duress, given debt to income ratios are some of the highest in the world. This means, the RBA could not only potentially stop rising rates sooner than expected, but now the market is thinking the RBA will begin to cut rates in December next year.

Australian dollar holds onto monthly gain


Despite the weaker than expected Australian inflation data, that would traditionally cause the Australian dollar (AUDUSD) to fall, today the Aussie is steady at 0.669. However, the AUD is up 5.3% this month. I suspect the reason for this is because it's ahead of LNG and coal shipments likely rising, to cater to the northern hemisphere winter.


For a weekly look at what to watch in markets - tune into our Spotlight.

For a global look at markets – tune into our Podcast.



 

Disclaimer

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000
Australia

Contact Saxo

Select region

Australia
Australia

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.