US markets bounce back as Europe looks to ‘winter from hell’
Stocks rose Wednesday — trying to shake off a three-week slide — as rates and oil prices eased, cooling investor concerns about continued high inflation.
On Wednesday, the Federal Reserve gave its summary on current economic conditions, known as the Beige Book. The report showed that economic activity was little changed in many regions across the US, and that growth outlooks remain weak.
The Dow Jones Industrial Average gained 1.40 per cent. The S&P 500 rose 1.83 per cent and the Nasdaq Composite ticked up 2.14 per cent.
Stocks rallied as Fed Vice Chair Lael Brainard reaffirmed that the central bank would do what it takes to stifle inflation, while also noting the risks of going too far. Many traders decided to focus on this latter point from her speech.
“At some point in the tightening cycle, the risks will become more two-sided,” Brainard said. “The rapidity of the tightening cycle and its global nature, as well as the uncertainty around the pace at which the effects of tighter financial conditions are working their way through aggregate demand, create risks associated with overtightening.”
Markets have been hoping that the Fed would start to hand out smaller increases starting in September, but at one point in the day, they were pricing in an 86 per cent chance of a 0.75 percentage point hike.
Across the sectors energy struggled as Oil prices fell by more than 5 per cent on Wednesday to their lowest since Russia invaded Ukraine on demand fears stoked by looming recession risks and downbeat Chinese trade data. Best performing thematics included high beta plays such as hydrogen, EV charger, lithium, social media & solar stocks.
Of course behind the strong US equity markets the economic war over energy continues to play out in Europe. Goldman Sachs said this week in a report ‘In our view, the market continues to underestimate the depth, the breadth and the structural repercussions of the crisis. We believe these will be even deeper than the 1970s oil crisis.”
Across Europe, the energy system is already stretched to breaking point. No excess capacity exists today in the sector .Rivers are dry. High temperatures are boosting electricity demand, which in turn requires increased amounts of natural gas at the margin. This has prompted a switch back to coal – for countries like Germany – where such capacity still exists and supplies are available.
Last year, nearly 40 percent of the natural gas used to heat homes and power businesses throughout the European Union came from Russia, one of the continent’s largest and most important trading partners for energy.
Now barely half that amount enters Europe, A complete cutoff from Russian gas would push Europeans’ energy bills even higher and hit the region’s economy even harder, with experts projecting a potentially deep recession in the most exposed countries. A complete shutdown would subtract nearly 3 percent from Germany’s economy next year
The expectations are for a ‘winter from hell’ across Europe
Currencies
One Australian dollar has strengthened compared to the US dollar yesterday, buying 67.69 US cents (Wed: 67.41 US cents), 58.71 Pence Sterling, 97.33 Yen and 67.63 Euro cents.
Commodities
Iron ore futures are pointing to a 0.7 per cent gain.
Gold gained $14.90 or 0.9 per cent to US$1728 an ounce.
Silver was up $0.35 or almost 2 per cent to US$18.26 an ounce.
Copper dropped $3.15 or 0.9 per cent to US$343.05 a pound.
Oil lost $4.94 or 5.7 per cent to US$81.94 a barrel.
Futures
The SPI futures are pointing to a 0.4 per cent gain.
Figures around the globe
Across the Atlantic, European markets closed mixed. Paris closed flat, Frankfurt added 0.4 per cent and London’s FTSE closed 0.9 per cent lower.
Asian markets closed mixed. Tokyo’s Nikkei lost 0.7 per cent, Hong Kong’s Hang Seng fell 0.8 and China’s Shanghai Composite closed 0.1 per cent higher.
Yesterday, the Australian sharemarket lost 1.4 per cent to 6729. .
Ex-dividends
There are 24 companies set to trade without the right to a dividend.
APM Human Services (ASX:APM) is paying 5 cents fully franked
ASX (ASX:ASX) is paying 120 cents fully franked
Beacon Lighting Group (ASX:BLX) is paying 5 cents fully franked
Contact Energy (ASX:CEN) is paying 18.7704 cents unfranked
CTI Logistics (ASX:CLX) is paying 4 cents fully franked
EBOS Group (ASX:EBO) is paying 39.0548 cents 95.77 per cent franked
Emeco Holdings (ASX:EHL) is paying 1.25 cents fully franked
G8 Education (ASX:GEM) is paying 1 cents fully franked
Globe International (ASX:GLB) is paying 16 cents fully franked
Laserbond (ASX:LBL) is paying 0.8 cents fully franked
Michael Hill International (ASX:MHJ) is paying 4 cents unfranked
Monadelphous Group (ASX:MND) is paying 25 cents fully franked
Monash IVF Group (ASX:MVF) is paying 2.2 cents fully franked
Pro Medicus (ASX:PME) is paying 12 cents fully franked
Perpetual (ASX:PPT) is paying 97 cents fully franked
Peter Warren Automotive Holdings (ASX:PWR) is paying 13 cents fully franked
ASX:RMC (ASX:RMC) is paying 4 cents fully franked
Reliance Worldwide (ASX:RWC) is paying 7.139 cents 10 per cent franked
Schaffer Corporation (ASX:SFC) is paying 45 cents fully franked
Shriro Holdings (ASX:SHM) is paying 4 cents fully franked
Smartgroup Corporation (ASX:SIQ) is paying 17 cents fully franked
Sky Network (ASX:SKT) is paying 6.5412 cents unfranked
SRG Global (ASX:SRG) is paying 1.5 cents fully franked
Woodside Energy (ASX:WDS) is paying 158.9385 cents fully franked
Dividends payable
There are eight companies set to pay eligible shareholders today.
Blackwall (ASX:BWF)
Gryphon Capital Income Trust (ASX:GCI)
Metrics Income Opportunities Trust (ASX:MOT)
Metrics Master Income Trust (ASX:MXT)
Qualitas (ASX:QAL)
SG Fleet Group (ASX:SGF)
Thorn Group (ASX:TGA)
Zimplats Holdings (ASX:ZIM)
IPO
There is one company set to make its debut on the ASX today. Keep an eye out for Terra Uranium (ASX:T92) after raising $7.5 million at 20 cents per share.
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
Copyright 2022 – Finance News Network
Source: Finance News Network
