Live: Binance freezes $3b in crypto assets on security breach, ASX up
The Australian share market is likely to rise on opening this morning, with ASX 200 futures up 15 points overnig
Tech giant Google and its owner, Alphabet, lost more than half a billion US amid worries AI would subsume its advertising business, the largest one-day fall in the company's history.
See how the trading day unfolds on our blog.
Disclaimer: this blog is not intended as investment advice.
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Market Snapshot
By Alison Branley
By Alison Branley
- ASX 200: 8,891 points
- Australian dollar: FLAT at 70.33 US cents
- Dow Jones: -0.25% to 52,342 points
- S&P 500: -0.304% to 7,720 points
- Nasdaq: -1.375% to 26,184 points
- FTSE: +0.26% to 10,722 points
- Spot gold: -1.15% to $US4,020/ounce
- Brent crude: +0.16% to $US115.5/barrel
- Iron ore: flat at $US90.75/tonne
- Bitcoin: +0.23% to $US79,023
Prices current around 8:10am AEDT.
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Interest Rates
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RBA
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Key Event
ECB joins the October interest rate hold club
By Michael Janda
By Michael Janda
We've had a flurry of central bank meetings this week, with the Bank of Canada lifting its benchmark rate for the first time in three years to 2.5%, while the Reserve Bank of New Zealand surprised markets by staying on hold at 2.75% and the US Fed surprised no-one by doing the same to keep rates at 3.75-4%.
Last night it was the turn of the European Central Bank, which stuck with the on-hold club.
"The ECB kept its policy rates unchanged at its October meeting and reiterated a data-dependent, meeting-by-meeting approach to setting policy," writes ANZ's G3 economist Brian Martin.
"We continue to think that the ECB will raise the deposit facility rate 25bp [basis points] to 2.75% at its next meeting in December.
"The dovish signal in the post-meeting statement that tighter financial conditions, owing to the rise in government bond yields, will weigh on growth and inflation, was offset by President Lagarde retaining a hawkish bias and noting that the Governing Council had considered a rate hike at this meeting. Market expectations for further hikes were ultimately little changed on the day.
"Lagarde announced she will depart the ECB in February. Pablo Hernandez de Cos and Klaas Knot are the frontrunners to replace her."
Next cab off the rank is the Bank of Japan later today, with markets pricing just a 2% chance it will hike today, but an 80% chance it will raise rates in December.
Of course, the Reserve Bank of Australia meets next Monday and Tuesday, with markets this morning pricing around a 90% chance of a rate hike being announced at 2:30pm AEDT on November 3.
I had a great chat with Carrington yesterday about the various central bank decisions to that point, of which the most interesting was the RBNZ's hold against 95% market expectations it would raise rates.
Investors becoming more discerning about how AI growth is funded, warns analyst
By Michael Janda
By Michael Janda
There's an interesting dichotomy between Google parent company Alphabet's third quarter results and their disastrous reception — a 12.6%, roughly $US500 billion share value wipe-out — and rival Microsoft.
Microsoft's share price barely moved overnight, off just 0.2% to $US530.14.
Betashares investment strategist Hugh Lam said the divergence reflects concern that Alphabet's free cash flow remained negative for a second consecutive quarter, while Microsoft is still able to fund its AI expansion while retaining positive free cash flow.
"The market is moving from indiscriminately rewarding AI spending to scrutinising how it is financed," he writes.
"The sell-off came despite clear green shoots at Alphabet. Google Cloud revenue rose 103% year-on-year to $30.7 billion, and the division's operating margin expanded to 36.2% from 23.7% a year earlier. Usage is growing too, with the Gemini app reaching one billion users.
"The key question is whether Alphabet's 2027 capex, which management expects to increase significantly, converts into Cloud revenue fast enough to bring free cash flow back into positive territory."
Key Event
Alphabet sheds half a trillion US dollars in worst fall on record as AI cracks widen
By Michael Janda
By Michael Janda
Investors appear to be becoming increasingly nervous about the artificial intelligence rollout, particularly following Alphabet results that disappointed the market.
Investors were spooked by the Google parent company's increased cash burn as its investment in AI exceeded its current ability to generate profits.
The company's Google Services unit missed quarterly revenue expectations by just over $US2 billion, generating $US96.3 billion, as growth in search revenue slowed.
Reuters reports that Alphabet's negative free cash flow of $US9.1 billion shocked analysts, who had generally expected it to come close to breaking even.
Alphabet told investors it plans to further increase its investment spending from this year's forecasts of around $US200 billion.
That saw its shares record their worst fall since listing, plunging 12.6% to $US283.82, wiping close to $US500 billion off its market valuation in one day.
That was enough to drive the Nasdaq down 1.4%, compared to modest 0.3% falls for the S&P 500 and Dow Jones Industrial Average.
Good morning
By Alison Branley
By Alison Branley
Hello all.
We're off to a sleepy start on this morning's blog. Did someone sleep in?
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