Stocks rise as yields hit lowest level in two months

Stocks rose Wednesday after yields briefly fell to their lowest level in two months, and the November market rally broadened into the Thanksgiving holiday.

The Dow Jones Industrial Average gained about 184.74 points, or 0.53 per cent, to 35,273.03. The S&P 500 climbed 0.41 per cent to 4,556.62. The Nasdaq Composite advanced 0.46 per cent to 14,265.86.

The yield on the 10-year Treasury briefly fell to 4.369 per cent Wednesday morning, the lowest level since Sep. 22. It later recovered and was last trading more than 1 basis point higher at 4.433 per cent. This also marks a significant drop for 10-year yield after it crossed the 5 per cent mark in October for the first time in 16 years.

More than half of the stocks trading on the New York Stock Exchange were up Wednesday, indicating widening breadth for the market rally. The tech-heavy Nasdaq also saw greater participation, with 62.9 per cent of the stocks in the index rising. Small- and mid-caps outperformed Wednesday, rising 0.7 per cent and 0.6 per cent, respectively.

And in response to the strong results in the US and in Europe, Hedge funds that shorted these markets lost $43 billion in recent days. Short sellers, particularly those targeting companies with higher borrowing costs, have faced challenges as "low-quality" stocks rebounded, coinciding with growing market confidence that the US Federal Reserve's rate hike cycle has concluded, according to Emmanuel Cau, Barclays' head of European equity strategy.

Chipmaker Nvidia reported its latest quarterly results Tuesday after the bell. The company posted fiscal third-quarter adjusted earnings and revenue that beat expectations, but warned export restrictions on China would weigh on its fiscal fourth quarter. Shares fell 2.5 per cent on Wednesday.

Meanwhile, the energy sector in the US was the only sector that closed lower, losing 0.1 per cent on Wednesday. Marathon Oil, EOG Resources and Devon Energy all closed lower.

U.S. crude prices fell on Wednesday as OPEC postponed a crucial production cut meeting, with the West Texas Intermediate contract for January dropping 67 cents to $77.10 a barrel, and the Brent contract for January declining 49 cents to $81.96 a barrel. The delay in the meeting was attributed to difficulties faced by Saudi Arabia and its allies in persuading Angola and Nigeria to agree to reduced output targets, as per Bloomberg sources.

In Singapore, iron ore prices continued their upward trend, increasing by 1 per cent to reach $134.60 per tonne. Global steel production, reported by 71 countries to the World Steel Association, saw a modest 0.6 per cent rise in October compared to the previous year, driven by increased output in India, Japan, the US, South Korea, and Russia, while China's production declined by 1.8 per cent from October 2022 levels.

Fifteen countries, including the UK, Canada, and Germany, have signed a letter to the COP28 presidency in the UAE, urging for an agreement to halt public and private financing for new coal power projects. While the US did not sign the letter, it has expressed support for ending new, unabated coal power. Additionally, the EU Parliament has voted in favour of a resolution at COP28, advocating for the cessation of global fossil fuel subsidies by 2025 and the establishment of a carbon removal certification system.

Uranium prices have experienced a significant surge, rising nearly 60 per cent year-to-date and exceeding $80 per pound for the first time in fifteen years. This increase can be attributed to various factors, including energy transition dynamics, security of supply considerations, and renewed utility contracts. Geopolitical tensions, particularly arising from Russia's invasion of Ukraine and a recent coup in Niger, have further heightened concerns regarding energy security and supply.

Futures

The SPI futures are pointing to a 0.2 per cent fall.

Currency

One Australian dollar at 8:30 AM was buying 65.43 US cents.

Commodities

Gold fell 0.48 per cent. Silver lost 0.75 per cent. Copper dropped 0.97 per cent. Oil fell 1.26 per cent.

Figures around the globe

European markets closed mixed. London’s FTSE fell 0.17 per cent, Frankfurt added 0.36 per cent, and Paris closed 0.43 per cent higher.

Turning to Asian markets, Tokyo’s Nikkei added 0.29 per cent, Hong Kong’s Hang Seng closed flat while China’s Shanghai Composite closed 0.79 per cent lower.

The Australian share market closed 0.07 per cent lower at 7073.

Ex-dividends
ALS Ltd (ASX:ALQ) is paying 19.6 cents 20 per cent franked
Cobram Estate Olives (ASX:CBO) is paying 3.3 cents 70 per cent franked

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

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