Retail spending data was a disappointment in the US, and had a domino effect on New York's stock exchanges overnight. Photo / NYC & Company
Keeping you up to date with the latest market moves, in association with Investment firm Jarden.
International
US
The release of United States retail sales data in November saw a drop of 0.6 per cent from October’s 1.3 per cent increase month on month.
Investors viewed this as much worse than anticipated, with the median expected movement being a drop of 0.2 per cent according to Bloomberg.
United States industrial production data also showed a drop month on month, decreasing 0.2 per cent despite supply chain pressures and costs easing.
In turn, key indices fell with the Dow Jones Industrial Average falling 2.7 per cent, the S&P 500 falling 2.7 per cent and the Nasdaq Composite falling 3.2 per cent.
Nine of 13 retail categories saw a fall, indicating consumer demand has slowed down amidst high inflation and a shift in preferences towards services.
Streaming service provider Netflix saw its shares fall 8.3 per cent after an article by Digiday reported the company had a deficit of ad-supported viewership guarantees being made to advertisers, allowing them to take their money back for ads that have yet to run.
This comes as management launched an ad-supported streaming service earlier in November that costs less than half of the basic plan at US$7 a month.
The reasoning for advertisers given was reportedly a wish to move ads to show for the first quarter of 2023 or later in the year, in the belief audience figures after the shopping holiday season will grow and be able to deliver on guarantees then.
Rest of the World
European markets dropped by 2.9 per cent in the Stoxx 600 as the European Central Bank increased interest rates by 0.5 percent.
Officials flagged inflation pressures driven by supply bottlenecks and utility costs amid Russia’s invasion of Ukraine.
This latest move comes after two consecutive rate increases of 0.75 percentage pojnts, giving hope that inflation may be decelerating.
Expectations of a recession have been stated by officials to be “relatively short-lived and shallow”.
Plans have also been announced to stop replacing maturing bonds from its 5 trillion Euro portfolio in a bid to ease inflation in the Euro as it would reverse years of asset purchases which have made the European Central Bank the largest creditor to Europe’s governments.
As a result, key borrowers have seen yields on 10-year bonds rise as much as 31 basis points (as seen by the Italian Government).
Commodities
United States 10-Year Treasury yields fell below 3.5 per cent as investors digested diminished economic data alongside the Federal Reserve’s aggressive rate hiking outlook, where they expect the interest rate to reach 5.1 per cent.
Natural gas prices rose 5.9 per cent with forecasts of another cold snap hitting Europe before Christmas.
Temperatures are set to fall below the seasonal average in the United Kingdom and the Nordics. Europe now relies on its 87 per cent stockpile amassed over its summer and mild autumn.
Australia
Australian unemployment remained at 3.4 per cent compared to the previous month as employment participation returned to a record high of 66.8 per cent.
This is evidence the Australian labour market remains tight, when coupled with underemployment (measuring the amount of people employed but looking for more hours) steady at 5.8 per cent (down from 6.0 per cent the previous month).
New Zealand
Auckland Airport issued a statement notifying investors that they have no plans to carry out an equity raise.
This comes after Auckland Mayor Wayne Brown suggested in an Auckland Council meeting yesterday that management planned to do so to fund a new domestic terminal.
As a result of this suggestion, for which his office claimed he was only “speculating”, shares went into a trading halt for an hour before the official announcement went live.
In the announcement, management reaffirmed its A- credit rating and intention to fund the new domestic terminal with borrowings, which is shown to amount to $1 billion on its capital expenditure programme.
New Zealand’s GDP for the third quarter this year rose 2.0 per cent (ANZ said median analyst expectation was 0.9 per cent) over the previous quarter, primarily driven by the services industry.
The transport, postal and warehousing sectors grew 9.7 per cent as this third quarter benefitted from a revival in both domestic and international air travel activity.
Exports of goods and services also benefited from the increase in incoming tourists and an increase in goods exports led by dairy and meat products.
Noticeably, household final consumption expenditure fell 0.1 per cent over the previous quarter’s drop of 3.4 per cent, as household budgets continue to tighten.
Coming up today
Business New Zealand is set to release its Performance of Manufacturing Index for November, an indicator of business activity in the manufacturing and services sectors.
Standard & Poor’s Global Performance of Manufacturing Index is set to be released this morning. Financial services company, National Australia Bank (NAB) will host their Annual General Meeting later today.
For more information on the latest market moves, get in touch with Jarden.
All market pricing and announcements are sourced from Refinitiv, NZX and ASX.
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