Australian and US markets diverged over the week, with US artificial intelligence (AI) bellwethers falling short of elevated investor expectations, while strong commodity performance supported the local market.
In the US, equities finished the week on a weaker footing. Oracle and Broadcom both declined post-earnings despite beating headline results, as investors focused on management guidance that failed to clear the high bar implied by current valuations.1 Dovish Federal Reserve commentary was also insufficient to lift sentiment, with the Fed’s dot plot revealing dissent among several non-voting members over the December rate cut, potentially challenging the aggressive easing path markets have priced in.2
In Australia, more hawkish-than-expected commentary from RBA Governor Michelle Bullock weighed on rate-sensitive sectors, with information technology and consumer discretionary stocks bearing the brunt of the pressure. However, materials helped lift the broader index, supported by strength across commodities, as several metals including silver and copper pushed to new all-time highs.3
Silver (ETPMAG) was once again the top performing asset of the week and hit a new all-time high of US$64.50 per ounce over the weakness as physical tightness in London combines with strong retail investment demand.4
In the world of commodities:
- Gold (GOLD) surged back above US$4,350 per ounce, with renewed investor enthusiasm partly spilling over from the strength in silver. Sentiment was also supported by reports that the Chinese central bank continued to add to its gold reserves in November, alongside approval for gold ETFs to be included in India’s National Pension System accounts.5
- Platinum group metals (ETPMPD, ETPMPT) have outperformed alongside silver in a sign that metals performance may be broadening from just gold and that a portion of the demand base may be structural rather than purely speculative.6
- Crude oil futures (BCOM) resumed its downtrend after briefly touching US$60 as optimism grew around a possible Russian Ukrainian peace deal, meanwhile Chinese economic indicators signalled weaker demand.7
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