Evening Wrap: ASX rallies led by iron ore and lithium, China's GDP growth beats expectations

The S&P/ASX 200 closed 103 points higher, up 1.54%.

Wall Street handballed us a strong session, with all sectors closing in positive territory. China posted its delayed GDP figures - which came in ahead of expectations, Hong Kong's Hang Seng Index nosedives to levels not seen since the Global Financial Crisis and the Yen experiences wild swings as the Bank of Japan intervenes.

Let's dive in.

Markets

The ASX 200 had a crack at rallying to a one month high but closed slightly off session highs. Markets are taking off as the Fed pivot narrative comes back into play - the Fed is expected to deliver one last jumbo sized 75 bp hike in November and begin slowing the pace of hikes. Bond yields pulled back sharply in response, which is fueling the recent gains for equity markets.

• All 11 sectors green

• Materials led to the upside thanks to gains from lithium, iron ore and gold miners

• Tech also rallied in-line with the Nasdaq, which closed 2.3% higher last Friday

• Energy was the worst performing sector, but still on a three day winning streak, up more than 6%

• 85% of the top 200 advanced

Economy

• China Q3 GDP growth was 3.9% year-on-year from 0.4% in Q2

  • Ahead of analyst expectations of 3.4%

• China industrial production rose 6.3% year-on-year in September from 4.2% in August

  • Ahead of analyst expectations of 4.5%

• China retail sales rose 2.5% year-on-year in September from 5.4% in August

  • Missed analyst expectations of 6.0%

• RBA assist governor Christopher Kent speech

  • "The size and timing of rate increases in Australia will depend on incoming data – including the response of household spending to the tightening in financial conditions that is still working its way through the system."

  • "Rate increases will also depend on the outlook for inflation and the labour market."

Commodities 

Nothing too exciting happened after the better-than-expected Chinese GDP numbers. Most commodities slightly eased after posting some gains last Friday.

• Iron ore futures on China's Dalian Commodity Exchange rose 0.1%

• Brent crude oil fell -0.94% to US$92.58 a barrel

Latest news

Post market brief

The ASX 200 surged in the first few minutes of trade and traded mostly lower until the last hour of trade. Overall, a day that was mostly in-line with what happened on Wall Street.

US bond yields continued to ease during our session. The US 2-year Treasury yield is on a two day losing streak, trading around 4.43% from last week's highs of 4.62%.

US 2-year Treasury yield (Source: TradingView)

Unfortunately, things aren't as simple as yields down, stocks up.

It's a massive week for US corporate earnings. It's more than likely we wake up to days where <insert mega cap company name here> moves the market. Notably, there's Alphabet, Microsoft and Visa all reporting after hours on Wednesday.

Asian markets are also under a significant amount of stress after China's Xi rolled out a clean sweep and consolidation of power an unprecedented third term as President. Hong Kong's Hang Seng Index is currently down -5.4% to levels not seen since the Global Financial Crisis. The Shanghai Composite is also down -1.4% to a March 2019 low.

The Japanese Yen is also experiencing wild swings amid further intervention by the Bank of Japan. The US dollar has appreciated almost 30% year-to-date against the Yen.

Markets remain extremely volatile and that's only going to be further exacerbated by the long list of earnings, politics and currency headlines we're going to see this week.

Index

S&P/ASX 200: Forming a bit of a range between 6,820 and 6,635.

XJO chart (Source: TradingView)

Major announcements

• Galan Lithium (ASX: GLN) +17.3% posted a 250% increase in mineral resource to 5.8mt contained lithium for its Hombre Muerto West Project in Argentina 

• Vulcan Energy (ASX: VUL) +13.4% said its chemical engineering team successfully produced the ‘highest grade, lowest impurity lithium hydroxide’ to date from its pilot plant

• Neometals (ASX: NMT) +10.5% was granted an environmental permit for its vanadium recovery plant in Finland  

• Pilbara Minerals (ASX: PLS) +6.1% sold another 5,000 dmt cargo of lithium spodumene at US$7,255 a tonne 

• Integral Diagnostics (ASX: IDX) +0.8% terminated the agreement to acquire the Exact Radiology business, which consisted of 11 clinics in South-East Queensland

• Bank of Queensland (ASX: BOQ) +0.3% plans to raise $300m through the offer of Capital Notes 3. Its expected to pay a distribution between 3.4% to 3.6% 

• Viva Energy (ASX: VEA) +0.4% said September quarterly sales volumes reached their highest level since pre-covid, with Group sales up 19.7% to 3,650m barrels of oil

• Betmakers (ASX: BET) 0% entered into a share purchase deed to acquire ABettorEdge, a horse betting technology provider 

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