Weekly Market Update

Altman Drama Shakes Up Silicon Valley

November 24, 2023
It has seemed all week that, in quiet US holiday trading, the only thing moving markets was the ‘will they/won’t they’ speculation about the future role of OpenAI’s CEO Sam Altman.

Stocks rallied again this week, fuelled by growing optimism around artificial intelligence (AI) and expectations that the Federal Reserve is nearing the end of its rate hiking cycle. It has seemed all week that, in quiet US holiday trading, the only thing moving markets was the ‘will they/won’t they’ speculation about the future role of OpenAI’s CEO Sam Altman. Last weekend he was sacked by the not-for-profit company’s board, apparently over concerns that his aggressive push to roll out ChatGPT raised safety concerns. He and most of the OpenAI workforce were then offered jobs by Microsoft (the very much ‘for profit’ 49% owner of OpenAI). By mid-week and after 750 of OpenAI’s employees had threatened to walk he was reinstated under a new board. Only in Silicon Valley.

The S&P 500 is up around 1% so far this week and is now up 8.4% in November, on pace for its strongest monthly gain since July 2022. Other global stocks were also mostly higher this week as some upbeat late-season earnings reports and cooling inflation bolstered risk appetite, also helped by bond yields which make equities relatively more attractive. In Asia, Hong Kong’s Hang Seng surged 2.7%, buoyed by a bounce among battered Chinese tech firms. Japan’s Nikkei 225 slipped initially but rebounded on positive rhetoric from Warren Buffet and remains up 28% in 2023, making it one of the world's top-performing indexes this year. European shares also edged upwards, as investors awaited further clues regarding the economic outlook from the Eurozone and ECB officials.

Australian shares pretty much treaded water this week and the benchmark S&P/ASX 200 index is flat for the week. The market was weighed down by losses among REITs, IT stocks and consumer staples, which were really just giving back gains from previous weeks.

On the upside, energy and utility stocks outperformed and the big miners and banks were stable. The Aussie dollar continued appreciating against the greenback, settling near a four-month high of US$0.66 amid iron ore price gains and a weaker US Dollar. Oil prices whipsawed midweek on OPEC uncertainty before settling lower. Gold meanwhile continued edging higher towards $2,000 per ounce, lifted by a weaker dollar and lower bond yields.

Long-term Australian bond and U.S. Treasury yields were fairly steady compared to previous weeks although the local bond market saw very short-term rate expectations move upwards quite sharply. This was because incoming RBA Governor Michelle Bullock reiterated intentions to keep policy tight in fighting domestic inflation pressures, pushing back on the government’s assertion that the persistent inflation pressures in Australia are purely a global phenomenon.  While the US curve remains deeply inverted, reflecting expectations of hard recession driven rate cuts sometime next year, the Australian equivalent suggests that the market either thinks the RBA will have less room for manoeuvre or a stronger economy. Next week we will get the new monthly Australian CPI report for October which may add to this debate.

Stocks Stumble, Bonds Steady as Growth Fears Loom

August 2, 2024
Equity markets declined over the past week, with the S&P/ASX 300 down -3.3% and the MSCI World Ex Australia index falling 2.7% in local terms, but only -0.9% in Australian Dollar terms for the unhedged Australian investor. Most of the falls happened overnight as a higher-than-expected GDP number put upward pressure on short-term rates.
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October's Financial Flux: A Precursor to Change in Investor Fortunes

August 2, 2024
During October, global markets experienced a downturn amidst inflation worries and the threat of rising interest rates, leading to a 2.7% fall in global equities and a 3.8% drop in Australian stocks, with tech sectors and major companies like Nvidia and Tesla taking notable hits. Despite the gloom, the materials sector saw gains, and gold shone brightly as a safe haven, appreciating by 7.3%.
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Australian Dollar Slides on Divergent RBA and Fed Policy Messaging

August 2, 2024
Most markets were up slightly this week as the US tech stocks led the way for most of the week before falling back overnight as Jerome Powell struck a more hawkish tone, implying that while rates in the US may be near their peak they might have to stay there for a while longer.
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Stocks continued their strong November rally this week, as hopes grew that inflation has peaked and the Fed is nearing the end of its rate hiking cycle. The S&P 500 rose 1.9% on Tuesday following the cooler than expected US CPI print, bringing its gains for the month so far to 7%.
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Altman Drama Shakes Up Silicon Valley

August 2, 2024
It has seemed all week that, in quiet US holiday trading, the only thing moving markets was the ‘will they/won’t they’ speculation about the future role of OpenAI’s CEO Sam Altman.
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August 2, 2024
Last week the InvestSense team spent much of the week preparing for and attending the Portfolio Construction Forum Strategies Conference.
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US Labor Upswing, Eurozone Inflation, and China's Policy Shifts

August 2, 2024
The week of August 28th to September 1st, 2023, saw a delicate balance between economic indicators and market sentiment play out in markets. The United States enjoyed what appears to be Goldilocks labor conditions, with strong job growth and a tightening labor market.
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Global Economic Sentiment Shifts as US Data Strengthens whilst Eurozone Data Weakens

August 2, 2024
Global economic sentiment shifted in the week as US data strengthened, and Eurozone data weakened. Weaker global economic data raised concerns about central bank hawkishness, leading to a stronger US dollar and weaker currencies. Crude oil prices remained resilient amid supply concerns, while tech stocks led US markets lower as Apple took a hit.
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US Markets Closed Flat, China Stabilizes, and the End of Monetary Tightening in Europe?

August 2, 2024
Despite higher-than-expected US CPI data, bond and equity markets remained calm initially. The jump in inflation was attributed to a temporary rise in energy prices and air travel. However, volatility set in due to the IPO of British chip maker ARM, pushing markets up by around 2%. Fears of a further rate hike set in causing US markets to close flat. Conversely, European, Australian, and UK markets ended the week positively, driven by the performance companies reliant on Chinese exports.
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Markets Slammed By Hawkish Rhetoric Despite Pause From The Fed

August 2, 2024
Equity markets around the world fell more or less in unison last week by about 3-4%, before bouncing slightly on Friday. The UK was really the only market to buck the trend, as the Bank of England unexpectedly kept rates on hold after inflation fell by more than forecast.
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Sticky Inflation Concerns Put Markets on the Back Foot

August 2, 2024
Last week markets were down again, reflecting the trends that took root in September - long-term yields pushing higher with markets on the back foot.
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August 2, 2024
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‘Buy the dip’ opportunism start surfacing

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US momentarily dips into official bear market territory

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