Oil and gold prices settle after yesterday's gains

Oil price outlook

Oil prices settled after rising more than 4% on Monday. Oil prices climbed in the aftermath of the Hamas attacks on Israel, with both WTI and Brent up. So far, the oil price movement has been driven by increased geopolitical risk rather than any tangible impact on supply. Gold held above $1,860.

The dollar basket

The USD basket has settled below 106, a reaction to what could be perceived as a dovish shift in Federal Reserve officials' tone. Two Fed officials turned around the mood and US rate outlook. Dallas Fed president Lorie Logan said that "If long-term interest rates remain elevated because of higher term premiums, there may be less need to raise the Fed funds rate," contrasting with previously hawkish rhetoric. Fed Vice Chair Philip Jefferson said the central bank would need to "proceed carefully" given the recent rise in yields. A handful of other officials, including Fed Governor Christopher Waller, are scheduled to speak today.

UK retail sales

The high cost of living continues to bear down on households in September, according to the latest British Retail Consortium (BRC) survey on UK retail sales. The BRC's like-for-like sales measure, which adjusts for changes in store space, slowed to show growth of 2.8% from 4.3% in August. The recent increase in the price of gasoline and diesel and in housing costs meant that consumers held off on much of their non-essential spending. Expensive items like furniture and electrical items performed particularly poorly.

Barclays

Separate data from Barclays showed the pace of annual growth in the amount of money spent on credit and debit cards increased to 4.2% in September from August's 2.8% rise. This acceleration was largely due to higher motor fuel prices. The Rugby World Cup also played its part. Spending at bars also rose last month.

Australian consumer sentiment

In Australia, consumer sentiment rebounded in October as interest rates were held steady for a fourth straight month. Westpac consumer sentiment rebounded 2.9% in October from the previous month to 82. This means that pessimists still outnumber optimists. The index has been below the neutral 100 mark since March 2022, the lnogest streak since the early 1990s recession. There was not much change in business confidence in the country in September, according to the National Australia Bank (NAB). The index remained at +1 for a third straight month, suggesting firms are evenly divided in terms of their business outlook.

Reach

Reach released a trading statement for the third quarter. Group revenue was 7.8%; digital revenue was down. 13.7%. Reasons include depressed open market yields and the well-publicised declining digital referral volumes, in particular from Facebook's de-prioritisation of news. As a result, over the nine-month period, year-on-year page views declined by 21%. Interestingly, data-driven revenue, which has a higher value and is more targeted, continues to be robust and now makes up a larger part of digital revenues at 42%. Reach remains confident of meeting profit expectations for the full year.

PepsiCo

Analysts say PepsiCo is expected to register bottom- and top-line growth when it reports third-quarter 2023 numbers today, before the opening bell. The Zacks consensus estimate for third-quarter revenue is for a 6.5% year-over-year (YoY) gain to $23.43 billion in earnings per share (EPS) at $2.17, suggesting 10.2% growth from Q3 2022. PepsiCo benefits from a diversified portfolio away from its flagship Pepsi drink; it's also been hard modernising its supply chain; it's improved its digital operations and distribution systems, so it has an advantage over others in the sector.

That being said, shares of PepsiCo and Coca-Cola have been slammed of late after Walmart's US chief executive said the new class of weight-loss drugs like Ozempic and Wegovy were causing customers to buy fewer groceries and cut back on those that are high in calories, such as soft drinks.