Global stockmarkets rallied last week, supported by an excellent start to the US September quarter earnings season, solid economic data, and despite surging commodity prices that continue to fan inflation fears.
Here are the top five things to watch in markets this week.
1. US September-quarter earnings season
September-quarter earnings reporting season continues this week with updates from US tech companies including Netflix, IBM, Intel and Tesla.
The share price of Netflix has rallied almost 7 per cent since the South Korean hit series Squid Game was released in mid-September, creating nearly $900 million in value.
The show cost just $21.4 million to produce and is expected to help see Netflix exceed its Q3 guidance of $7.47 billion of revenue and EPS of $2.55.
2. Surging energy prices
Crude oil made fresh cycle highs last week, building on its recent gains following the easing of COVID-19 restrictions fuelling demand against a backdrop of tight supply.
Crude oil starts the week trading above $82 and appears set to test resistance near $84. Should this occur, consumers are likely to see petrol prices rise again at the bowser.
3. Will the ASX200 play catch up?
Last week the ASX200 underperformed its peers rising just 0.6 per cent, while US shares rose 1.8 per cent and Eurozone shares rose 2.5 per cent.
If the ASX200 can break and close above resistance near 7400/20, it would allow the local bourse to play catch up and set sights on the August 7632 high into year end.
4. Will Bitcoin trade to fresh all-time highs?
Bitcoin surged 7.5 per cent on Friday on prospects a Bitcoin ETF is imminent after a tweet from the US Securities and Exchange Commission.
Bitcoin is currently trading at $62,314, just 4 per cent below its all-time year of $64,895 from April this year.
Can Bitcoin make fresh all-time highs this week?
5. How will markets respond to evidence of a sharp rise in inflation in NZ?
New Zealand’s annual inflation rose to 4.9 per cent this week, its highest level in 10 years after inflation accelerated in Q3.
Earlier this month, the Reserve Bank of New Zealand (RBNZ) raised the official cash rate for the first time in seven years by 25 basis points to 0.5 per cent.
The interest rate market is now fully priced for a follow-up 25 basis point hike.
However, the market is pricing in a 20 per cent chance that the central bank will raise its official cash rate by 50 basis points at its next meeting in November.
Will this week’s high inflation print be enough to convince the market and the RBNZ a 50 basis point hike is needed in November?
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