Trending On Livewire: Weekend Edition - Saturday 2nd November

Since mid-April this year, the Aussie market has been on a steady grind higher. The index moved from around 7600 up to a recent high near 8400 in a fairly linear fashion. The last two weeks, however, have seen selloffs and there have been a few signs of cracks in the façade.

First and foremost, the VIX index in the US has spiked from a low around 18 in mid-October, up to 22. The inflation print in Australia this week, whilst moving in the right direction, all but guarantees we won’t see a rate cut this year.

Meanwhile, inflation in Europe this week unexpectedly rose, highlighting the decoupling of the global economy and subsequent central bank policy. On the US earnings front, the market hasn’t been particularly impressed with big tech earnings so far, with RBC labelling the whole season to this point as "mildly disappointing". This is to say nothing of the US election next week, which continues to be a meaningful overhang on risk sentiment. And while markets don’t typically care who sits in the White House, they will care if there is an inconclusive and protracted election process.

There’s always a lot to play for in markets, but it feels like we’re approaching the inflexion point for a couple of major factors that could determine whether the party continues, and we get the fabled Santa Claus rally into the end of the year, or we end 2024 with a whimper. A certain election outcome with a clear result will go a long way to ensuring the bull run continues.

Chris Conway, Managing Editor, Livewire Markets