Behind the numbers it's all about energy pricing

Behind the numbers it’s all about energy pricing

US stocks fell for a third straight day overnight, jeopardising a summer comeback rally, as the Federal Reserve and other global central bankers continued to signal they will raise interest rates to squash inflation despite the negative consequences for economic growth and, potentially, corporate profits.

All eyes are on the Friday jobs report, but a strong number would just mean more of the same rhetoric from the Fed, in terms of its commitment to lowering inflation

The latest comments came from New York Fed President John Williams on Tuesday who said. “I do think with demand far exceeding supply, we do need to get real interest rates … above zero. We need to have a somewhat restrictive policy to slow demand, and we’re not there yet,” Williams told the Wall Street Journal.

Of course inflation is not just a US problem as annual price changes are impacting the Eurozone as well as the UK and Japan. With forecasts for inflation in the UK rising the fastest

Overnight the S&P 500 fell 1.1 per cent, The Nasdaq Composite lost 1.1 per cent, Meanwhile, the Dow Jones Industrial Average slid nearly 1 per cent

Looking across the sector, energy was the worst performer as Energy prices eased on Tuesday, with West Texas Intermediate futures, the U.S. oil benchmark, falling more than 5 per cent. Natural gas futures also dipped.

And while Russia continues to weaponise gas & oil supplies to Europe, Moscow is currently earning an average of $20 billion a month from oil and gas exports, up 42 percent from a year ago, helping compensate for Western sanctions

However volatility in energy pricing is rattling energy suppliers and purchasers. Disruptions at French nuclear and hydro generators are adding to the pressure that shortages of Russian gas are putting on energy markets.

The European Energy Exchange was alarmed enough to call an extraordinary meeting of its member council this week. This rejected a halt to trading, while calling for EU states to bolster the strained finances of energy buyers. That stress was reflected in a plea from German utility Uniper for another 4bn euro bailout to keep the lights on. All these price movements feed into steep inflation forecasts for next year, worsening western Europe’s apocalyptic mood.

In some good news, China's steel industry appears to show signs of improvement with output and profitability likely to increase in September as the world's second-biggest economy finally starts responding to government stimulus efforts. Steel mills have been signalling towards a rise in production during September as profit margins return to positive territory and low inventory levels need replenishing. Note that Beijing is taking more steps to boost economic activity, including increasing funding support for infrastructure projects and cutting interest rates. That said these new measures are not a remedy for China's troubled construction sector, but they should serve to boost confidence and activity

Currencies

One Australian dollar has weakened by about ½ a cent compared to the US dollar yesterday, buying 68.57 US cents (Tue: 69.02 US cents), 58.83 Pence Sterling, 95.17 Yen and 68.45 Euro cents.

Commodities

Iron ore futures are pointing to a 1.7 per cent fall.

Gold prices fell on Tuesday as investors positioned for a period of high interest rates in the United States and elsewhere. Gold lost $13.40 or 0.8 per cent to US$1736 an ounce.

Silver was down $0.38 or 2.1 per cent to US$18.29 an ounce.

Copper fell $5.95 or 1.7 per cent to US$355.10 a pound.

Oil fell $5.37 or 5.5 per cent to US$91.64 a barrel.

Futures

The SPI futures are pointing to a 0.8 per cent fall.

Figures around the globe

Across the Atlantic, European markets closed mixed. Paris lost 0.2 per cent, Frankfurt added 0.5 per cent while London’s FTSE closed 0.9 per cent lower.

Asian markets closed mixed. Tokyo’s Nikkei added 1.1 per cent, Hong Kong’s Hang Seng fell 0.4 per cent and China’s Shanghai Composite closed 0.4 per cent lower.

Yesterday, the Australian sharemarket gained 0.5 per cent to 6998.

Ex-dividends

There are 27 companies set to trade without the right to a dividend.

Adacel Technologies (ASX:ADA) is paying 3.25 cents unfranked
Australian Ethical (ASX:AEF) is paying 3 cents fully franked
Ashley Services Group (ASX:ASH) is paying 3 cents fully franked
Accent Group (ASX:AX1) is paying 4 cents fully franked
Bega Cheese (ASX:BGA) is paying 5.5 cents fully franked
Blackmores (ASX:BKL) is paying 32 cents fully franked
Carlton Investments (ASX:CIN) is paying 58 cents fully franked
Endeavour (ASX:EDV) is paying 7.7 cents fully franked
Humm Group (ASX:HUM) is paying 1.4 cents fully franked
IRESS (ASX:IRE) is paying 16 cents 25 per cent franked
McGrath (ASX:MEA) is paying 1 cents fully franked
Metrics Income (ASX:MOT) is paying 1.28 cents unfranked
Metrics Master (ASX:MXT) is paying 1.11 cents unfranked
Naos Ex-50 (ASX:NAC) is paying 1.1 cents fully franked
Navigator Global (ASX:NGI) is paying 4.3447 cents unfranked
NAOS Small Cap Opportunities Company (ASX:NSC) is paying 1.05 cents fully franked
Ooh!Media (ASX:OML) is paying 1.5 cents fully franked
OZ Minerals (ASX:OZL) is paying 8 cents fully franked
Propel Funeral (ASX:PFP) is paying 6.25 cents fully franked
Partners Grp Global (ASX:PGG) is paying 0.9669 cents unfranked
Pengana International Equities (ASX:PIA) is paying 1.35 cents fully franked
Shape Aust Corp (ASX:SHA) is paying 2 cents fully franked
Servcorp (ASX:SRV) is paying 10 cents unfranked
TABCORP Holdings (ASX:TAH) is paying 6.5 cents fully franked
Treasury Wine Estate (ASX:TWE) is paying 16 cents fully franked
Wesfarmers (ASX:WES) is paying 100 cents fully franked
Woolworths Group (ASX:WOW) is paying 53 cents fully franked

Dividends payable

There are 21 companies set to pay eligible shareholders today.

Abacus Property Group (ASX:ABP)
Carindale Property Trust (ASX:CDP)
Charter Hall Group Limited (ASX:CHC)
Charter Hall Retail Reit (ASX:CQR)
Elanor Commercial Property Fund (ASX:ECF)
Elanor Investors Group (ASX:ENN)
Elanor Retail Property Fund (ASX:ERF)
Fat Prophets Global Property Fund (ASX:FPP)
GDI Property Group (ASX:GDI)
Genworth Mortgage Insurance Australia Limited (ASX:GMA)
Growthpoint Properties Australia (ASX:GOZ)
GPT Group (ASX:GPT)
Kelly Partners Group Holdings Limited (ASX:KPG)
Liberty Financial Group (ASX:LFG)
Lowell Resources Fund (ASX:LRT)
Mirvac Group (ASX:MGR)
Plato Income Maximiser Limited. (ASX:PL8)
Scentre Group (ASX:SCG)
Shopping Centres Australasia Property Group (ASX:SCP)
Stockland (ASX:SGP)
Waypoint Reit (ASX:WPR)