Australian stock markets

ASX set to extend losses, Fed rate decision awaited · On Wall St: Dow -0.5% S&P 500 -0.4% Nasdaq +0.2% · In New York: BHP -1.4% Rio -2% Atlassian +0.8% · Tesla + ...

We are still projecting that forward earnings will rise from $US238.53 per share currently to $US255.00 at the end of this year and $US275.00 at the end of next year. The former would match analysts’ consensus expectations for 2023, and the latter their expectations for 2024 (since forward earnings are the time-weighted average of analysts’ consensus forecasts for this year and next, at year-ends they match analysts’ expectations for the upcoming year). In a mild recession scenario, those numbers would probably be closer to $US200 to $US220.” “Our objection to this more aggressive action is that it is unnecessary, because the forces which have driven the recent inflation numbers are already fading. “In short, the seeds of much lower inflation over the next year have already been sown. If we conclude that a recession is the most likely scenario, we will have to lower our estimates. It’s less likely that the S&P 500 will be at a new record high in 2023, as we had been projecting, but it could get close to there by the end of next year.” We have no argument with the idea that rates need be substantially higher, but the Fed does not need to wield a sledgehammer. That said by bring forward these rate hikes, the market is now also pricing a rate cut by the end of 2023 and 50bps rate cuts in Q1 2024.” This revised assessment has prompted us to change our target ranges for the S&P 500’s forward P/E and price level this year: “We aren’t in the recession camp, yet. On Friday, data showed the consumer price index increased 8.6 per cent in the 12 months through May, the most in 40 years and defying predictions that inflation had already peaked. “America still has a choice to make.