Look Ahead 5/10/23: AU, DE, US trade balance; Imperial Brands; Levi Strauss

(Video Transcript)

ASX 200 a volatile space

Hello, I'm Angeline Ong and welcome to your Look Ahead to Thursday, 5 October 2023. We start in Australia where we are looking at the trade balance figures: a surplus is expected to widen to AUD8.7 billion.

Just having a look at the ASX 200, otherwise known as the Australia 200 on the IT platform, it has been ticking higher, as you can see there, since around February 2023.

Although it must be said there's a huge amount of volatility, notwithstanding the volatility and changes seen, given that the Reserve Bank of Australia (RBA) and also the Reserve Bank of New Zealand (RBNZ) were the earliest to start tweaking interest rates higher.

And speaking of that, I want to show you the Australian dollar versus the US dollar because this week both central banks stood pat on interest rates. However, Australia said it was still going to keep the door open to potentially more hikes if inflation is not truly under control.

The Australian dollar trading around 6352 after being lower, touching an 11-month cross on Tuesday's session, I believe. The next major bear target is a low from October last year at around 6170.

Having a look at the New Zealand dollar, the Kiwi, against the US dollar as well because, as I mentioned earlier, the RBNZ also stood pat on interest rates, holding it at 5.5%.

The Kiwi has slipped to 5877. It's coming back a bit right now, but it has fallen heavily because of the jump in Treasury yields which then lifted the US dollar.

German trade balance forecast to narrow

Moving swiftly on, we've also got trade balance figures out of Germany and the surplus is forecast to narrow to €15.8 billion.

From the US, we also have trade balance figures there and initial droppers claims. What is interesting is this comes ahead of the non-farm payrolls (NFP). That's the key number everyone's waiting for on this Friday, and also from the ADP numbers out earlier this session, we saw that futures picked higher after that ADP number, private payrolls, showed a softer-than-expected reading.

Sunak's smoking proposal raises hackles

In the UK, we've got Imperial Brands out with a trading statement. Just bring up Imperial Brands here for you because what the company said and what UK Prime Minister Rishi Sunak has said in this session is actually what's most fascinating about this stock.

Rishi Sunak has said that the UK is to raise the legal smoking age over time and the cigarette maker, Imperial Brands, then hit back, warning that the UK's proposal to ban sales of cigarettes to future generations threatened "significant unintended consequences" but gave no details.

So we're trying to find out what they meant by significant unintended consequences. This is Imperial Brands reacting to Rishi Sunak's comments about the UK to raise the legal smoking age over time.

Levi's earnings due

And from the US, look out for Levi's, out with third-quarter earnings and Constellation Brands, second-quarter numbers there, and ConAgra as well.

Just show you Levi's shares here because Levi's, Strauss, is a big retailer and also bellwether, especially ahead of the holiday shopping season. Levi's is at a rise in quarterly sales when it reports its results on 5 October 2023.

But bear in mind, the key thing is to find out exactly what the California-based company is saying about future consumption and also whether or not the cost-of-living crisis the inflation is starting to mean that its consumers start to hold back from spending on pricier items.

For more market-moving news, I'll be back on Beat the Street at 1.30pm London-time to give you a heads up to the US trading day and IG's Jeremy Naylor will be doing the same at 7.30am ahead of the European market opening. Follow me on Twitter @AngelineOng. This is IGTV.