Daily Market Commentary 17th October 2023

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Global equity markets continued to surge, despite rising inflation and wars in the Middle East and Europe. Gold and Oil have both jumped sharply over the last week or so, since the Israeli war kicked off and inflationary pressures are once again on the rise. Bond yields in Europe and the US were heading northwards, once again, reflecting the inflationary pressures. There may be technical reasons for the rally in equity markets, but the fundamentals are pointing the other way. The Empire State Manufacturing Index contracted by 4.6%, while Japanese Industrial Production fell sharply in August, leading to a 4.4% contraction annualised.  The US Dollar was softer, with the EUR bouncing to 1.0540, while the GBP looked to regain 1.2200.

The election outcome in NZ did little to impact markets and the NZD, which looked to regain 0.5900, while the AUD jumped back to 0.6330. The new Government in NZ is yet to be determined but it will be a centre-right coalition change, just the make-up is yet to be determined. The NZ inflation reading will probably have more impact on the NZD, set to be released today, while Australian markets will be watching the RBA minutes, also set for release today.

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