13 November 2023 | Weekly Snapshot

Did you know?

The benchmark lithium price is down around 70% since January, one of the steepest dives of any commodity this year.

Market Movements

Australian Share Market (ASX 200) – flat (down 0.02%) with positive offshore leads as bond yields pulled back although geopolitical tensions remained elevated. Health Care (+3.09%) was the best performing sector followed by Consumer Discretionary (+1.63%) and Communication Services (+1.34%) with Telstra getting a boost from a nationwide telecoms outage at competitor, Optus. The Energy sector (-4.26%) led the declines followed by Info Tech (-1.81%) and Materials (-0.74%). The RBA hiked the cash rate by 25 bp to 4.35% on Melbourne Cup Day noting inflation is still too high and more persistent than expected with economic growth over H1 also stronger-than-expected. Having underestimated both growth and inflation the RBA also tweaked their forward guidance to place greater emphasis on data dependency. In the RBA’s Statement on Monetary Policy released Friday, GDP and inflation forecasts for next year were revised higher and unemployment lower. For June 2024 (EOFY) GDP forecasts were raised to 1.75% growth from 1.25% prior with the forecast unemployment rate lowered to 4.00% from 4.25% with the economy expected to remain resilient. Inflation forecasts were raised with CPI now expected at 4.00% from 3.50% prior and the trimmed mean, the RBA’s preferred measure, was raised to 4.00% from 3.25% consistent with the higher for longer narrative on inflation and interest rates. The domestic Bank reporting season was in focus with full year results from Westpac and NAB showing strong profits, increased dividends, strong balance sheets and buy backs, and low impairments, consistent with the RBA’s messaging. Westpac said hardship levels remained at around half the numbers seen during the pandemic and is still not seeing any significant increases in customers falling behind on repayments. With CEO Peter King saying, “We’re broadly positive about the economic outlook over the next year.” Although NAB CEO Ross McEwan said challenges in the operating environment became more evident as fiscal 2023 progressed, reflecting the impacts of monetary policy tightening and inflationary pressures on households and the economy. This had led to its financial results softening in the second half of the period, compared to the previous six months.


U.S. Share Market (S&P 500) – up 1.31%, with the Dow (+0.65%), and Nasdaq (+2.37%) also higher and November off to a strong start following 3 consecutive monthly declines. Tumbling bond prices the past couple of months found further support following the weaker than expected non-farm payrolls report with jobs increasing by 150,000 for the month, a slight miss on the 170,000 expected. The super strong numbers for August and September were also revised down. The unemployment rate rose to 3.9%, the highest level since January 2022, against expectations that it would hold at 3.8%. The Federal Reserve had been guiding for a year end rate hike but following the jobs data markets pricing for a December rate hike reduced to just a 10% chance. Fed chair Powell spoke at an IMF conference in Washington later in the week and was slightly hawkish saying they are not totally confident on the path to bringing inflation back to target. There was nothing new in the speech but did acknowledged inflation has given policymakers a few “head fakes,” and that they will not hesitate to tighten further if required but will continue to move carefully. With over 80% of S&P 500 companies having now reported Q3 earnings, the blended (year-over-year) earnings growth rate is +3.7%, well ahead of the -0.3% decline expected at the beginning of reporting season. Although according to FactSet, Q4 bottom-up EPS estimates have decreased by nearly 4% during October, much steeper than the five-year average of -1.9% and 20-year average decline of -1.7%. Just 14% of the 71 S&P 500 firms that provided Q4 guidance upgraded earnings, while nearly half lowered their outlook. Sales guidance was also weak with a record low 7% upgrading Q4 guidance. Although 2024 earnings growth expectations have been stable, so looks more like some pull forward from Q4 into a stronger than expected Q3. The University of Michigan consumer sentiment was lower than expected (and lowest in six months) with inflation expectations rising. The 1yr expected inflation rate rose 0.2 points to 4.4%, while inflation expectations over the 5-10yr horizon also rose 0.2 points to 3.2%, the highest since 2011.

Portfolio Movements

Diageo (DGE) issues trading update – downgrades first half. Diageo provided a trading update on Friday night noting due to weaker performance outlook in Latin America and Caribbean (LAC) they now expect organic operating profit growth for the first half of fiscal 2024 to decline compared to the first half of fiscal 2023, primarily due to LAC’s declining net sales, increased trade investment, lower operating leverage and adverse mix resulting from downtrading. LAC is nearly 11% of Diageo’s net sales value. For the second half of fiscal 24 they expect to see a gradual improvement in organic net sales and organic operating profit growth from the first half of fiscal 2024. The market was disappointed as Diageo issued guidance in September that the outlook for fiscal 2024 had not changed.


Novo Nordisk (NOVO) Q3 profits surge. Novo Nordisk, now Europe’s largest company by market capitalization, reported surging Q3 profits last week in line with the upwardly revised guidance last month. Net profit surged by 56% to 22.5 billion Danish kroner ($3.2 billion) from Q3 last year, with business especially strong in the US thanks to strong demand for the appetite suppressant Wegovy and the diabetes drug Ozempic. The latter is also supposed to help with weight loss. Q3 sales increased by 38% in exchange rate adjusted terms to 58.7 billion kroner and EBIT rose by 33% to 26.9 billion kroner compared to the previous year. Novo Nordisk is booming thanks to its blockbuster diabetes and obesity drugs with FY revenue expected to increase by 32% to 38% this year compared to 2022.


Shell (SHEL) reported a strong Q3 last week. Adjusted net income $6.22B was down 34% on the same period last year mainly due to lower energy prices and slightly below consensus $6.25B. Adjusted EBITDA of $16.34B was ahead of the $16.21B with strong trading of liquefied natural gas (LNG) helping offset a drop in production. Strong free cash flow and lower Capex saw the company announce share buybacks of $3.5 billion over the next three months, up from $2.7 billion in the previous three months, and maintained its dividend unchanged at $0.331 per share with the company returning around $23 billion to shareholders so far this year in the form of buybacks and dividends.

The Week Ahead

Domestic economic data highlights this week include Westpac Consumer and NAB Business Confidence tomorrow, the Q3 Wage Price Index on Wednesday, and the October Employment data on Thursday.

International highlights include China Loan Growth and Foreign Direct Investment today and US Treasury Budget tonight. UK Unemployment is tomorrow night along with Eurozone Q3 GDP (2nd estimate, German ZEW Economic Sentiment, US NFIB Small Business Index and the US October CPI which is the data highlight of the week. Japan Q3 GDP is Wednesday along with China Industrial Output. UK CPI and PPI is Wednesday night along with Eurozone Industrial production and US Empire State Index, PPI, Retail Sales and Business Inventories. Thursday night is US Philly Fed Index, Capacity Utilization, Industrial production, NAHB Housing Market Index, with US Housing Starts Friday night.

Portfolio company reporting this week includes ANZ full year results today, CBA Q1 tomorrow, SSE plc first half on Wednesday and Annual General Meetings for Sonic Health, BHP, and Charter Hall on Friday.

Saward Dawson Wealth Advisors Pty Ltd, a Corporate Authorised Representative of Akambo Pty Ltd t/a Accountants Private Advice

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Some numerical figures in this publication have been subject to rounding adjustments. Akambo Pty Ltd (including any of its directors, officers or employees) will not accept liability for any loss or damage as a result of any reliance on this information. The market commentary reflect Akambo Pty Ltd’s views and beliefs at the time of preparation, which are subject to change without notice.