Market Updates

Wall Street finished deep in the red overnight, hit with a renewed bout of volatility on talks about a US economic recession and a wave of institutions unwinding popular carry trades in Japan. The S&P 500 plunged 3%, its worst daily fall in about two years, down ~8.5% from its peak. The NASDAQ plummeted 3.43%, and the Dow lost 1,034 points (2.60%). Down 1,238 points at worst. Small caps Russell 2000 fell 3.33%, and Wall Street's "fear gauge", the VIX, surged 64.90%. At one point, it registered its largest daily spike since 1990. Japan's TOPIX fell 12%, recording its biggest three-day fall stretching as far back as 1959 as institutions rushed to unwind their carry forward trades (See Marcus Take for in-depth analysis). In Fed Speak, Chicago President Goolsbee attempted to downplay recession fears, stating that the Fed does not react to one month's numbers on jobs and can wait for more data before the September meeting. Meanwhile, the probability of a September rate cut now sitting at 83%, according to the CME FedWatch Tool. The gap between 10Y and 2Y yields briefly turned positive for the first time since July 2022 before later inverting, with the 2Y now ~12bps above the 10Y yield. USD Index slid 0.46%, and bitcoin tumbled 7.15%.

ASX to fall. SPI Futures down 27 points (-0.36%).

COMMODITIES

• Oil falls as global equities selloff offsets rising Middle East tensions.
• Gold slips over 1% as wider market rout spills over.
• Global growth angst pushes copper to 4-1/2-month low.
• BHP requests state mediation with Escondida union in Chile.
• Glencore to pay $152mn to resolve Swiss bribery investigation.

 ASX 200 fell a huge 294 points or 3.7% today to 7650 as banks came under serious pressure. Financials across the region were aggressively sold off from MQG to Mitsubishi. The Big Four were torched, and the Basket dropped to $214.81 (-5%). CBA falling 5.7%. Insurers too sold down aggressively, QBE down 5.0% and SUN off 5.8%. REITs were also sold off despite yields remaining relatively steady. GMG down 7.1% as a tech stock, GPT off 2.6% and SGP down 3.5%. Industrials also in the seller’s sights, WES down 3.4% with WOW and COL off 2.9% and 1.2% respectively. REH down 4.7% and BXB falling 4.3%. QAN dipped 4.9% amidst a shake-up of airport slots. Tech wrecked, WTC off 8.8% and XRO falling 5.6% with the All-Tech Index down 6.1%. Resources outperformed, BHP down only 2.1% with RIO hardly changed, FMG down 1.9%. Gold miners eased despite bullion holding steady, EVN down 2.0% and GMD off 1.9% with NEM off 2.0%. Uranium fallout continues and lithium stocks mixed. PLS lower by 1.1%. Oil and gas down, WDS off 3.6% on WA environmental issues, STO fell 5.0%. In corporate news, ARG reported profits down on last year, falling 2.0%. RHC downgraded guidance to 265-270m, falling 0.3%. Nothing locally on the economic front, RBA tomorrow. No rate rise expected. Asia markets in all sorts, Japan had to have trading suspended due to the heavy falls especially in the financials. China modestly lower in comparison. 

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The sell-off on Wall Street continued for a second consecutive session overnight. Weak jobs data fuelled worries that the Fed's decision to hold rates at two-decade highs is risking a hard landing/recession. Market fears have triggered a surge in volatility seeing the VIX jump to 23.39 (+25.8%), its highest since March 2023. The S&P 500 recorded its worst reaction to jobs data in almost two years, falling 1.84%. The NASDAQ plummeted 2.43% and confirmed it was in correction territory. The Dow traded lower all session, losing 611 points (-1.51%). Down 989 points at worst. The Russell 2000 slumped 3.52%, falling to a three-week low and saw its largest two-day fall since June 2022. Non-farm payrolls rose by 114k in July, significantly below expectations of 175k, marking one of the weakest prints since the pandemic. US Unemployment rate unexpectedly rose for a fourth month to 4.3%, a near three-year high. Treasury yields took a nosedive overnight after jobs numbers showed the US created fewer jobs than expected, supporting bets for more aggressive rate cuts by the Fed this year. 10Y yield dropped 18.8bps and the 2Y yield fell 28.5bps. USD Index fell to a four-month low, down 1.14%. Bets for a 50bps cut by the fed at a September meeting have jumped to 69%, according to CME FedWatch.

ASX set to tumble another 115 points (-1.46%) according to SPI futures.

COMMODITIES

• Exxon delivers $9.2bn Q2 profit, raises output target.
• Chevron earnings slide, Hess merger arbitration drags on.
• Chilean court rejects Tianqi's request to pause SQM-Codelco deal.
• Copper firms on potential US rate cuts after jobs data.
• Oil settles at 8-month low after disappointing US job numbers.
• OPEC oil output rises in July on Saudi rebound, survey finds
• Gold retreats on profit-taking and logs weekly gain.

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ASX 200 drops 172 points in the worst one-day fall in 16 months, to 7938 (-2.1%). For the week, we are relatively unchanged. All that record-breaking rally was undone. Big hits across the board as US markets led us lower and Japan in trouble. Banks were sold off aggressively, with CBA leading the sell off down 2.8% as ANZ fell only 1.8%, outperforming.  MQG off 2.2% on news of a $1bn hybrid issue, compounding weakness. Insurers too in negative territory as yields fell. REITs too saw sellers as GMG reversed some gains from yesterday to close down 5.1%. Healthcare saw some pressure. CSL dropped 1.6%, with RMD results out this morning proving a short-term positive at least for a while, until a slight rethink and the stock closed down 1.8%. Industrials were also under pressure. WES fell 2.9% with QAN crash landing 4.1% as retail slipped lower too. LOV down 4.6% and JBH off 3.0% on a broker downgrade too. In the miners, it was a train wreck for uranium stocks, the fallout from the NXG capex increase, plus news from Kazatomprom, put a knife into the sector. It was not a great day, SLX caught the bug down 8.5%, DYL fell 19.2% and PDN off 10.8%. Big iron ore miners fared relatively better, with BHP down only 1.2% and RIO off 0.8%. Lithium stocks depressed, and the short sellers in PLS celebrated with a 6.5% drop. Oil and gas stocks are lower too. In corporate news, SQ2 put out a solid update with a BNPL boost from Afterpay, three years this week since the deal. On the economic front, nothing locally with US payrolls tonight. Asian markets poleaxed with Japan falling the most since 2020, down 5.2%, HK off 2.4%, and China down a more modest 0.8%. 10-year yields rising slightly to 4.08%.

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US equities kicked off August sharply lower as the market whipsawed to risk-off just a day after the S&P 500 and NASDAQ recorded their best daily performance since February on Wednesday. The Dow ended 495 points lower (-1.21%). Up 254 points at best. Down 744 points at worst. The S&P 500 lost 1.37%, just one day after rallying 1.6%, and the tech-heavy NASDAQ dropped 2.30%. Russell 2000 slumped 3.03%, its biggest daily loss since February, and Wall Street's fear index, the VIX, briefly traded above 19 before easing to 18.59 (+13.63%). Economic data overnight has spurred concerns that the US economy is slowing faster than expected. Early gains in the market evaporated after the US ISM Manufacturing PMI showed a larger-than-expected contraction, falling to 46.6 in July, its 20th decline in activity over the last 21 months. Cracks in the labour market also began to emerge, with Initial Jobless claims rising to an 11-month high, climbing 14k to 249k, exceeding expectations of 236k. Treasury yields tumbled on soft economic data, the 10Y and 2Y yields have fallen to six-month lows, with the 10Y yield now under 4%. USD edged higher as rising geopolitical concerns in the Middle East drove a safe haven boost, while the British pound fell after the BoE cut interest rates from a 16-year high.

ASX set to tumble. SPI Futures down 144 points (-1.78%)
COMMODITIES

• Copper falls on soft Chinese factory data, higher inventories.
• Gold withdraws from two-week high as focus shifts to US payrolls data.
• Oil slips over $1 as supply intact despite Middle East conflict fear.
• Iron ore rises to more than 1-week high on upbeat demand outlook, China stimulus hopes.
• Shell beats forecasts with $6.3bn second quarter profit.
• Japan's Nippon Steel raises FY profit forecast after Q1 beat.
• OPEC+ sticks to oil policy, repeats could pause Oct hike.

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ASX 200 rallies only 22 points to 8115 (+0.3%) as good times roll. Record high. A slight sell-off in the banks with a tentative rotation to resources. BHP up 0.5% and RIO doing much better up 1.9%. FMG underwhelmed, although up another 0.6%. Gold miners better but still no real frenzy, NST up 0.9% and NEM up 2.0%. Uranium and lithium tried to rally but it was muted. PDN up a modest 2.2%. PLS up 4.4% as Albemarle announced closures to Australian production. Oil and gas slightly firmer, WDS up 1.5% and KAR doing well, up 3.8%. Banks slid a little. CBA down 0.9% and ANZ up 0.7%, as some catch-up required! MQG rose 0.7%, with insurers under a little pressure as 10Y yields fell to 4.08%. REITs racing ahead, GMG up 3.8% and GPT up 0.7%. Tech better, WTC up 1.4% and XRO pushing 1.5% ahead. Staples doing well, WOW up 1.0%, with ALL up 0.2%.  In corporate news, PSQ got a knockout bid at 205c, BVS rose 2.2% on a return of capital and DRO returned to trade, promptly falling to close to the issue price, down 14.8%. On the economic front, Balance of Payments came in below expectations, increasing $537m in June. Asian markets are weaker despite US futures firming. Japan down 3.2%, China flat and HK +0.2%. Dow Futures up 0.2% and NASDAQ Futures up 0.7%. 

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US equities rallied overnight, driven by a surge in tech stocks and dovish commentary from Powell. The S&P 500 climbed 1.58%, with six out of 10 sectors advancing, led by tech and consumer cyclical stocks. The NASDAQ rose 2.64%, its second-biggest daily percentage gain since February, buoyed by gains in Nvidia, up 12.8%, on positive sales forecast by peer AMD, which also rose 4.34%. Philadelphia SE Semiconductor Index finished up nearly 7%. The Dow gained 99 points (+0.24%) up 455 points at best, and small caps Russell 2000 added 0.51%. For July, equities were mostly higher, with significant rotation out of tech, growth and momentum stocks and into small caps and value. Dow +4.41%, S&P 500 +1.13%, NASDAQ -0.75%, and Russell 2000 +10.10%. The Fed held rates at 5.25%-5.50% as expected. There were no explicit signals for a September rate cut. However, Powell said a rate cut could be on the table in September. US treasury yields tumbled. Both the 10Y and 2Y yields fell over ten basis points each. The US dollar fell 0.49% and Bitcoin eased 2.13%.

ASX to rise. SPI Futures up 17 points (+0.21%). 

COMMODITIES

• Oil gains nearly 3% on rising Mideast tension, falling US crude stockpiles.
• Gold climbs over 1% after Fed's Powell hints at early rate cut.
• Copper up on weaker dollar, hopes for Chinese stimulus.
• Tumbling lithium prices push Albemarle to fresh round of cost cuts.
• Chevron's proposed deal for Hess faces new delay over arbitration schedule.
• US oil demand set seasonal record in May, EIA data shows.

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ASX 200 has finished the day with a huge rally up 139 points or 1.8% to 8092. It’s best session since November 2022. All major sectors closed in the green after an after-hours chip stock bounce in the US combined with a mid-morning inflation numbers boost (+1% QonQ in line with expectations). Rate-sensitive Technology was the best-performing sector as bond yields took a huge fall. Australian 2Y down 15.9bp and the 10Y down 13.6bp (almost equivalent to one rate cut).

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Wall Street finished mixed as mega-cap tech stocks extended their losses in late trade as Microsoft’s results fuelled concerns over AI. The Dow advanced 203 points (+0.50%) with gains in major banks offsetting losses in Merck -9.81% and Procter & Gamble -4.84%. Dow up 326 points at best. Down 11 points at worst. S&P 500 fell 0.50%, while the S&P Equal Weight Index gained 0.46%, buoyed by gains in the financial and energy sectors. NASDAQ Composite tumbled 1.28%, and the NASDAQ 100 slid 1.38%, which is now down ~9% from its all-time high and tittering on the cusp of correction. Nvidia fell 7%, erasing $193bn from its market value dragging the Philadelphia semiconductor Index down 3.88%. Funds found their way to small caps. The Russell 2000 rose 0.35% as the rotation out of growth mega caps continues. In economics, the June JOLTS report showed job openings ticked lower, though higher than expected, and US July consumer confidence came in roughly in line with expectations though consumers were still largely concerned about inflation. Treasury yields eased, and the VIX jumped 6.57%.

ASX to rise on opening bell. SPI Futures up 29 points (+0.37%).

COMMODITIES

• Oil prices slide 1%, settle at 7-week low on China worries.
• Iron ore retreats further as key China economic meeting, strong global supply weigh.
• Aluminium hits 5-month low, copper down on risk-off sentiment.
• Gold climbs on rate cut hopes as Fed meeting looms.
• BP raises dividend as $2.8bn quarterly profit beats forecasts.
• OPEC+ likely to stick to output policy at Aug 1 JMMC meeting.

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ASX 200 rallies off lows to close down 36 points at 7953 (-0.5%) as banks steadied after early falls. CBA up 0.8%, and the Big Bank Basket rising to $231.70 (+0.4%) as ANZ copped a broker downgrade. Financials were generally steady, with REITS under some pressure, GMG off 0.5% and SGP down 0.7%. MPL rose 1.3%, bucking the negativity. Industrials were slightly weaker, no real harm done, tech eased back but off lows. WTC down 2.1%, and REA off 0.4%. Once again, it was resources that stumbled. FMG fell 10.2% under serious pressure as a $2bn block trade was being priced. Iron ore weakness was headwind too, BHP down 1.3% and RIO off 1.0%. Lithium was weaker again, PLS down 4.5% and MIN dropping 3.7%, with gold miners also under pressure. EVN down 1.3% and PRU off 4.3%. Oil and gas slipped too, as Brent fell below $80. Uranium stocks also easing back. In corporate news, CCP rose 14.0% on its better-than-expected results, and APX was Lazarus-like in a business update, rising 55.8%. BHP joined with Lundin to make a Canadian copper asset, IGO fell 4.8% after reporting higher underlying earnings. Nothing on the economic front as the BoJ meeting kicks off today. Asian markets lower, Japan down 0.2% and HK down 1.3% with China off 0.7%. Dow Futures up one point and NASDAQ Futures down 16 points. 

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