What grabbed the headlines last week?

 

A likely pivot by the Fed

Global stock markets received a welcome boost after the release of the FOMC meeting minutes on Wednesday.

The minutes, which were taken from the FOMC meeting held on November 1-2, revealed that policy makers were willing to consider softening US rate hikes.

“A substantial majority of participants judged that a slowing in the pace of increase would likely soon be appropriate,” according to the minutes.

“A slower pace in these circumstances would better allow the Committee to assess progress toward its goals of maximum employment and price stability.”

Experts believe the November meeting was a turning point and marked the beginning of a likely Fed pivot.

Consulting firm DeVere CEO Nigel Green predicted that the year ahead promises to be much more positive for markets after the turbulence of 2022.

Green cited four main reasons: inflation peaking in most major economies, low valuations providing buying opportunities for investors, the growing digitalisation of business models, and the peaking of the dollar’s strength.

“The Federal Reserve won’t meet again until the next rate-setting meeting in mid-December, but with stock markets being forward-focused, these latest minutes will pretty much set the mood until the end of 2022,” Green said.

Speech by RBA governor Phil Lowe

RBA Governor Dr Philip Lowe meanwhile told a dinner event in Melbourne last week that Australians should brace for a higher inflation and lower growth.

He also told people not to expect much of a pay rise, even as inflation soars.

“If we all buy into the idea that wages have to go up to compensate people for inflation, it will be painful, so best avoid that,” Lowe said.

He also said, “higher inflation calls for higher interest rates but lower output, and fewer jobs call for lower interest rates.

“It is likely that we will have to deal with this tension more frequently in the future.”

Lowe’s comments came as Australians enjoy the best job market in decades amid a tight labour market.

Unemployment figures released the previous week showed that we currently have the lowest jobless rate in half a century at 3.4%.

Price cap on Russian oil

Oil prices were mainly down for the week as the G7 continues to work towards a price cap on Russian oil.

A US$65-$70 a barrel cap has been proposed, a range that some experts think would blunt the effectiveness of reducing revenue to Russia.

Russian president Putin has warned of ‘great consequences’ for the energy markets if this cap was to be introduced.

“Vladimir Putin stressed that such actions are contrary to the principles of market relations, and are highly likely to lead to grave consequences for global energy markets,” the Kremlin said.

Amid these talks, OPEC+ producers discussed rising its output by up to 500,000 barrels a day, in a move meant to heal a rift between the Saudis and the US.

The price cap in whatever form is expected to take effect on December 5, which would force firms from transporting or providing insurance for Russian oil shipments that are sold above the capped price.

 

The Economic Calendar
Monday November 28 – Friday December 2

All sources from Commsec

Australia and New Zealand

MONDAY
Preliminary retail trade for October
RBA governor Phil Lowe expected to speak

WEDNESDAY
Building approvals for October
Monthly CPI indicator
Construction work done in the September quarter
Private sector credit for October

THURSDAY
Corelogic national home value index for November
Business investment for the September quarter

FRIDAY
Leading indicators for October
RBA governor Phil Lowe to speak on a panel for Bank of Thailand’s 80th anniversary
Detailed retail trade for October
NZ Reserve Governor Adrian Orr speaks

Global

MONDAY
ECB President Christine Lagarde speaks

TUESDAY
US home prices for September
EU business and consumer survey for November
EU consumer confidence for November
EU services and industrial sentiment for November

WEDNESDAY
China purchasing managers’ index for November
US Fed Beige Book
US ADP employment change for November
US GDP for the September quarter
US JOLTS job openings for October
US pending homes sales for October
EU core CPI for November
EU private sector loans

THURSDAY
US Challenger job cuts for November
US personal income and spending for October
US construction spending for October
US PCE core deflator for October
US construction spending for October
US ISM manufacturing index for November
EU manufacturing PMI for November
EU unemployment rate for October

FRIDAY
US non-farm payroll for November
EU PPI for October

 

The ASX IPO calendar for this week

Toubani Resources (ASX:TRE)

Listing: 28 November

IPO: $32.5m at $0.20

This resources player is focused on developing a gold platform in West Africa.

The company is primarily focused on the development of the Kobada Gold Project in Southern Mali, which has a global resource base of over 2.3 Moz of gold and the potential to produce more than 100,000 ounces of gold per annum.

Source Certain International (ASX:SC1)

Listing: 30 November

IPO: $7m at $0.20

SC1 provides a scientific provenance verification service for agriculture, seafood, mining and resource sectors.

SC1 says scientific analysis of physical product samples allows clients to mitigate risk, validate digital data, protect their brand and support transparency within their supply chains.

The company’s origin verification solution is able to identify the mine, farm, fishery or plantation from which a product originated.

Tourism Holdings Rentals (ASX:THL)

Listing: 1 December

IPO: N/A

This global tourism operator is headquartered in Auckland, New Zealand and is focused on holiday vehicles for rent and sale globally.

In Australia and New Zealand, the company operates under the maui, Britz and Mighty rentals brands, and the RV sales brands – RV Sales Centre, RV Super Centre, and KEA Motorhomes.

In the US, they operate under Road Bear RV Rentals and Sales, and El Monte RV Rentals and Sales and in the UK are a JV partner with Just Go Motorhome Rentals & Sales.

THL also manufactures motorhomes and specialist vehicles, sells B2B and B2C products for the RV industry and operates the Discover Waitomo Group within New Zealand.

Taiton Resources (ASX:T88)

Listing: 2 December

IPO: $10m at $0.20

Taiton’s projects include the Lake Barlee gold project in WA, the Highway polymetallic project in SA, and the Challenger West gold project also in SA.

The company believes its dominant land holding at the Highway Project will allow them to potentially uncover the Next Elephant Deposit in Australia.

Taiton will be undergoing a series of grassroots exploration and also several walk-up drilling targets.

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