New Zealand Market Movers
The New Zealand market (NZX 50 Index, -0.2%) was weighed down on Friday by stock heavyweights, including Ryman Healthcare (-3.0%), Fisher & Paykel Healthcare (-2.4%), and Contact Energy (-1.8%).
Many internationally important events will occur this week, including the interest rate decisions the US Federal Reserve, The Bank of England, and the European Central Bank. Locally, we have Food Inflation data on Tuesday and NZ GDP Growth Rate on Thursday.
Australia Market Movers
The Australian market (ASX 200 Index, +0.5%) advanced on Friday thanks to stronger iron ore price, which climbed +6.7% last week to $116/T. As such, BHP Group (+2.7%), Fortescue Metals (+2.8%), and Rio Tinto (+2.3%) all benefited.
Star Entertainment Group will be subject to a raft of disciplinary actions including its Brisbane and Gold Coast casinos being placed under the supervision of an independent manager imposed by the Queensland government after it levied a $100 million fine against the company.
Europe Market Movers
European markets (Stoxx 600 Index, +0.8%) advanced on Friday, led by Construction (+1.8%) and Material (1.8%) stocks.
The Bank of England and the European Central Bank deliver their interest rate decisions in quick succession on Friday, at 1.00am and 2.15am, respectively.
US Market Movers
US markets (S&P 500 Index -0.7%) closed lower Friday, with all major indices in the red. Shares of Lululemon (-13.0%) tumbled after giving weaker-than-expected fourth-quarter outlook. Pain was also felt in related stocks Gap (-4.7%) and Nike (-1.7%).
Before the Federal Reserve’s interest rate decision on Thursday (8.00am), the country’s Inflation Rate for November is released on Wednesday (2.30am).
Stock in Focus: Rio Tinto (RIO.ASX)
Just like BHP, Rio Tinto shares have rebounded recently, partly on hopes of China eventually reopening and as Chinese authorities provided stimulus to the property sector to boost construction activity, supporting iron ore pricing. Commodity prices have held up well due to supply and demand dynamics, but also as an inflation hedge. With the latter likely to ease, we believe added pressure from a slowing in economic activity means we are nearing the end of the current commodity cycle boom.
For this reason, we downgrade Rio Tinto from a BUY to a HOLD, and would take some profits as it trades close to all-time highs, and see some downside risk to its share price and dividends over the near-term, as recession risks play out, and weighs down on commodity prices.
What Markets will be Watching this Week (UTC +13)
Monday
GB GDP MoM OCT
Tuesday
AU Westpac Consumer Confidence Index DEC
Wednesday
US Inflation Rate YoY NOV
Thursday
US Fed Interest Rate Decision
AU Unemployment Rate NOV
Friday
GB BoE Interest Rate Decision
EA ECB Interest Rate Decision
US Retail Sales MoM NOV