Bank of Melbourne Morning Report


Main Themes: Investor appetite towards risk improved on Friday with the VIX index falling to its lowest level since January 2020. The outcome appears at odds with the heightened uncertainty still prevailing around the outlook.

Share Markets: US shares were mixed in Friday’s holiday shortened session. The Dow rose 0.3%, the S&P 500 ended flat, and the Nasdaq lost 0.1%.

Interest Rates: US bond yields rose across the curve with the US 2-year yield increases 5 basis points to 4.95% and the 10-year yield up 6 basis points to 4.47%. These are signs perhaps that the bond rally is stalling.

Foreign Exchange: The AUD/USD stuck to another tight trading range. This time 0.6550-0.6591. The top of this range was the highest since August, reflecting the narrow range the AUD has been stuck in for some time.

Commodities: OPEC+ is close to resolving a dispute over output quotas with some African members that forced it to delay its policy meeting until Thursday. The group is working to tweak the 2024 targets set for Angola and Nigeria, and an agreement looks within reach, officials said. Market watchers now see an increased risk of deeper supply cuts.

Australia: The monthly finance statistics were released on Friday and showed that the Federal budget in the four months to end October is around $9.5 billion ahead of the government’s forecasts. The upside surprise driven mainly by higher personal income tax. Company tax was also higher than expected by around $1 billion (in accrual terms).

Australia will introduce legislation this week to help overhaul the RBA, including affirming its mandate.

Japan: Headline consumer prices rose from 3.0% year-on-year in September to 3.3% in October. When excluding food and energy, the annual rate eased from 4.2% to 4.0%.

Eurozone: The German IFO business climate survey rose to 87.3 in November, from 86.9 in October. The result was a touch below the median consensus forecast of 87.5. The IFO report suggested that the worst for the German economy had passed.

United Kingdom: The S&P global manufacturing purchasing managers’ index (PMI) fell to 49.4 in November, from 50.0 in September, according to the preliminary reading. The composite PMI stayed unchanged at 50.7 and the services PMI rose 0.2 points to 50.8.



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Bank Of Melbourne Morning Rep&hellip