AUD/USD rises after RBA hikes rates – Daily Market Brief, November 1, 2022

The RBA raised interest rates by 25 basis points as the central bank continues to pivot away from outsized hikes. Could the Fed follow suit after the November meeting? AUD/USD rises above 0.64.

·         China could be looking to end its zero-COVID strategy

·         BP reports a quarterly profit of $8.2 billion, well above the $6.2 billion forecast

·         Oil rises after OPEC upwardly revises its long-term demand forecast

RBA

The RBA raised interest rates for a seventh straight meeting but opted to continue with smaller-sized hikes. The RBA raised interest rates by 25 basis points for a second time, continuing its pivot away from outsized hikes and taking the benchmark lending rate to 2.85%, its highest level in 9 years. The RBA highlighted that interest rates have increased substantially since May and are expected to continue rising, albeit at a slower pace, with inflation now expected to peak at 8%. Growth forecasts were also downwardly revised to 3% this year and 1.5% in 2023.

The RBA’s decision to hike rates by a smaller size comes as bets rise that the Federal Reserve could follow suit after the FOMC meeting tomorrow and start to hike rates at a slower pace. AUD/USD trades +0.65% at the time of writing.

China zero-COVID

Stocks on Wall Street ended yesterday in the red, but that didn’t distract from the solid month of gains for US indices across October, a historically challenging month for equities. The Dow Jones rallied 14% across the month in its best monthly performance since 1976. Meanwhile, the S&P500 and the Nasdaq rallied 8% and 4%, respectively, weighed down by disappointing big tech earnings.

Europe is pointing to a stronger start, taking cues from Asia, where Chinese stocks roared higher on reports that China is looking to form a COVID reopening committee to assess how to exit the zero-COVID strategy.

BP

BP will be in focus after reporting huge profits in the July to September period, benefitting from high oil and gas prices due to the Russian war in Ukraine. The oil giant booked profits of $8.2 billion, almost three times the profit made in the same period last year and well ahead of forecasts of $6.2 billion. BP also announced a fresh $2.5 billion share buyback scheme.

The eye-watering profit comes as calls for windfall taxes grow louder on both sides of the Atlantic. Yesterday President Biden accused oil companies of war profiteering as he floated the idea of a windfall tax. His comments came after Chevron and Exxon Mobil reported enormous profits around a week ahead of the mid-term elections.

Oil

Oil prices are on the rise, paring losses of 2% from the previous session after OPEC raised its medium-term and long-term demand forecasts and said that it stood ready to step in and support oil prices if needed. The calming comments came after oil prices fell on Monday after weak manufacturing PMI data from China, the world’s largest oil importer, and amid renewed concerns over new COVID lockdown restrictions in China. However, should reports that China is looking to move away from zero-COVID prove to be true, oil could push higher still.

Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their decisions. The analysis and commentary presented do not include any consideration of your personal investment objectives, financial circumstances, or needs.

Sources: Bloomberg, CNBC, Reuters

Original article provided by Trading Writers

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