Market Updates

US equities rallied overnight, rebounding from their worst weekly performance since April. The Dow halted a two-day skid, rising 128 points (0.32%). Up 185 points at best. Down 65 points at worst. The S&P 500 and NASDAQ rose 1.08% and 1.58%, respectively, led by gains in the “Magnificent Seven”. Russell 2000 advanced 1.66%, and Wall Street's fear index, VIX, plummeted 9.75%. S&P 500 Tech sector gained 1.78%, topping sectoral gainers and breaking its four-day losing streak. Alphabet (+2.2%) is expected to report a ~14% rise in quarterly revenue, marking its fourth consecutive double-digit growth. Telsa jumped 5.1% despite reports that their Q2 margins are expected to hit a more than five-year low. US treasuries were muted. 10Y and 2Y yields inched higher 1.2bps and 0.4bps. USD Index eased 0.10% in quiet trade as the market digested US President Joe Biden’s decision to end his re-election.

ASX  to rally at open. SPI Futures up 55 points (+0.70%). 

COMMODITIES

• Oil drops as investors look past Biden exit, focus on weak fundamentals.
• Gold slips to over 1-week low as dollar firms, investors await more Fed cues.
• Iron ore edges lower as investors digest mixed signals from China.
• Aluminium slips to nearly four-month low on demand concerns.
• Oil market likely to be in surplus next year, Morgan Stanley says.
• US senators introduce bill to speed approvals of energy projects.
• Saudi Arabia's growth this year marred by lower for longer oil output.

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ASX 200 rallies off lows to close down only 40 points at 7932 (0.6%). Broad based losses following US weakness Friday. Banks saw sellers emerge with the Big Bank Basket down to $226.16 (-0.3%). ANZ and NAB the worst hit, MQG lost 0.5% and QBE off 1.1% with financial generally weaker. REITs slipped slightly as bond yields rose. Industrials weaker but no massive dramas, defensive supermarkets held up ok. Tech eased but not huge issues. In resources, lithium and uranium stocks fell, PDN off 1.7% on quarterly report and PLS slid 3.3% with S32 clobbered 12.6% on WA environmental issues and write downs. Gold miners mixed but generally holding up well. EVN up 0.5% and NEM up 0.3%. Oil and gas saw a sell off as WDS fell 2.1% after announcing a large US acquisition. STO dropped 0.9% and coal stocks slid, WHC down 4.0% on its production numbers. In corporate news, IFL rose 5.0% on a business update, DRO dropped another 20.9% on its quarterly report. Nothing on the economic front locally. The PBoC cut rates slightly today although no real help to Chinese equity markets, mixed with HK up 0.9%, and China lost 0.9%. 10-year yields fell to 4.30%.


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Biden withdraws from US Presidential Race - US Futures opening slightly positive.

Wall Street ended the week lower. A global technical outage cause caused by a software glitch resulted in global chaos with grounded flights, and upended markets disrupting businesses around the world. CrowdStrike was behind the massive IT failure. A glitch in their software caused Microsoft’s Windows operating system to crash. Its stock fell as far as 15% before paring losses, ending 11.10% lower. The Dow traded lower all session, down 377 points (-0.93%). Down 462 points at worst. S&P 500 dropped 0.71%, and the NASDAQ fell 0.81%. Russell 2000 eased 0.63%, and VIX rose another 3.70% touching its highest level since April. Nvidia -2.6% lead a sell-off in chip stocks, pressuring the Philadelphia SE Semiconductor index 3.1% lower. Treasury yields rose. 10Y yield up 4.1bps, and 2Y yield up 4.6bps, both rising from four-month lows hit earlier in the week.

ASX SPI down 67 points.

COMMODITIES

• China copper smelters eye more output cuts as raw material supply tightens.
• Copper extends downturn to three-month low on China economic gloom.
• London Metal Exchange systems not affected by global cyber outage.
• Oil down $2 as investors eye Gaza ceasefire hopes.
• Gold slips from all-time peak on profit taking, firmer dollar.
• Iron ore posts weekly loss on lack of China stimulus, demand outlook.

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ASX 200 fell 65 points to 7972 (+0.8%) off its lows in quiet nervous trade. Dow futures slightly higher on the Trump speech. 90 minutes and talking unity. Red across the screens, banks gave back some recent gains, with the Big Bank Basket down to $226.80 (-0.9%). CBA fell 0.8%, and ANZ under pressure on the recent scandal, falling 1.2%, insurers slid, and REITs in the doghouse for a change. SGP down 2.0%, and SCG off 0.9%. Industrials were weaker but no great issues, WES off 0.8%, and WOW and COL slid slightly. ALL bucked the trend up 1.0%, with tech relatively stable. The All-Tech Index %. Resources once again the problem child, no real stimulus or plan from the Chinese Plenum. BHP down 2.1%, and RIO dropping 1.7%. Lithium stocks steady as gold miners slid on profit taking and some downgrades for EVN down 2.2%. Oil and gas stocks slid and uranium again under pressure. In corporate news, LIC finished off a week it would rather forget withdrawing forward guidance following ABC reports earlier this week and fell 13.9%. WBC had a small win with APRA, and WHC said that inflation was ‘rife’. Unit costs rising 11% in the last year. On the economic front, nothing today, the government announced the sale of $10bn in 11-year bonds next week. Asian markets mixed again, HK down 1.9%, Japan slightly weaker, and China of 0.2%. 10Y yields rose to 4.29%. There appears to be a serious Microsoft outage taking place this afternoon too.
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The Dow Jones Industrial Average slid 533.06 points, or 1.29%, closing at 40,665.02. The S&P 500 dropped 0.78% to end at 5,544.59. The technology-heavy Nasdaq Composite lost 0.70%, closing at 17,871.22.

All but one of the 11 sectors that comprise the S&P 500 traded lower, while nine out of every 10 Dow members also saw losses. Even the small-cap focused Russell 2000, which has run up amid expectations for forthcoming interest rate cuts, dropped about 1.9%.

ASX SPI Futures down 87 points

COMMODITIES

• Oil prices steady as US rate-cut hopes contend with economic slowdown signals.
• Fed rate-cut hopes keep gold near record levels.
• Dalian iron ore falls on weakening steel market; focus on Third Plenum.
• Copper output from Chile's Codelco this year to top 2023, chairman says.
• Exxon clash with Chevron hinges on change of control of Hess' Guyana asset.
• Fed rate-cut hopes keep gold near record levels.
• OPEC+ unlikely to change oil output policy at Aug 1 JMMC meeting.
• Price of China's strategic germanium hits record high on possible state buying.

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ASX 200 slips 21 points to 8037 (-0.3%) after the jobs number put rate rises (yes, rises) back on the table. Relatively calm markets as US futures rose and chip stocks soured again in Asia. Banks eased back, CBA down 0.6% and the Big Bank Basket slipping to $228.89 (-0.4%). Other financials eased QBE down 0.4% and CGF off 1.6%. REITS sagged, SGP down 1.3%, SCG off 1.8%, and GPT falling 3.7%. Industrials were mixed, DMP crashed 8.2% as it closed stores in Japan and France. Retail were mixed, SUL up 1.0% and HVN down 0.4%. Tech eased as NASDAQ fell overnight, WTC copped a 6.3% fall, and the All-Tech Index dropped 2.5%. Resources once again in the naughty corner. FMG down 1.4% on its hydrogen move and layoffs, lithium stocks continue to be depressed, gold miners up despite a slight slip in bullion and uranium stocks whacked, PDN down 4.2% and DYL off 5.8%. Oil and gas stocks slightly better. In corporate news, ZIP rose 11.2% after its $200m placement, AX1 rose 10.2% on store closures,and EVN ran 2.8% on its quarterly. On the economic front, unemployment rose to 4.1%, but with participation rising and 50k jobs created, rate rises cannot be ruled out. In Asian markets, Japan -1.6%, China +0.2, and HK +0.5%. 10Y yields steady at 4.241%. Dow and NASDAQ Futures higher, gaining 0.1% and 0.4%, respectively. 

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• Nasdaq, S&P 500 end sharply lower, hit by chips, megacaps; Dow extends rally.
• Trade fears hamper tech stocks, dollar falls amid rate cut talk.
• ASX to fall, Nasdaq tumbles as semiconductor stocks plunge  SPI down 43 points
• Chip stocks shed over $500 billion in value on China trade fears.
• Europe's STOXX 600 falls for third straight session as tech drags.
• Top Fed officials say they are 'closer' to cutting interest rates.
• Yen surges on possible intervention, sterling hits one-year high.

COMMODITIES

• Iron ore slumps to three-week low on weak China demand, strong global supply.
• Copper dips as China demand fears balance dollar slump.
• Oil prices gain 2% on big US storage withdrawal, weaker US dollar.
• Gold extends record rally on Fed rate-cut bets, softer dollar.
• Miner Vale sees iron ore output at high-end of 2024 guidance after Q2 rise.
• US crude stockpiles fall sharply, fuel builds, EIA says.

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ASX 200 cruised to another 59-point gain up around 0.7% as once again, banks and industrials took their cue from US records. Slight sell-off on the close. CBA pushed up another 0.8%, with NAB up 1.0% and the Big Bank Basket hitting new record highs of $229.72 (+0.9%). MQG had a better day with the US Investment Houses showing the way and rose 2.5%, with insurers also in demand. Financials generally are doing well on rate cut expectations. Healthcare again good, CSL up only 0.1%, with SHL and RHC better. REITs firmed yet again. GMG up 1.2%, and industrials from TLS to WES did well. WOW and COL up around 1%, and ALL bouncing back 0.9%. Utilities were slightly better, and tech stocks in demand, with WTC up 3.3%. Resources were once again mixed. BHP production report failed to move the dial much, down 0.9%, with RIO and FMG easing 0.3% to 1%, respectively. Gold miners in demand, NST up 3.4% and EVN up 1.5%. Lithium stocks showing some signs of life perhaps, LTM 4.6% better on Citi’s suggestion that RIO should take it out. Uranium stocks weakened, PDN down 1.1% and DYL off 3.5% on its quarterly. In corporate news, ZIP launched a large placement and SPP at 152c, SGR switched the pokies back on, CTT fell 4.0% on a update, and STP one pulled itself up 23.3% on a better-than-expected quarterly in ‘innerware’. Nothing significant on the economic front. Total dwelling commencements rose 0.5% to 39,715 dwellings. Asian markets treading water, with 10Y yields up 5bps 4.24%. Dow Futures down 3 points. NASDAQ Futures down 88 points. 

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US equities rose overnight supported by stronger-than-expected retail sales data which reinforced the view the Fed is approaching its easing cycle. The Dow Jones hit an all-time closing high for a second consecutive session, rising 743 points (+1.85%) its strongest performance since June 2023. The S&P 500 rose 0.64% to 5,667, its 38th record high this year, and the NASDAQ gained 0.20%. The rotation into small caps continues, Russell 2000 advanced 3.50%, recording its biggest five-day rally since 2020. The Russell 2000 has beaten the NASDAQ 100 by almost 12 percentage points over the last four sessions, a feat not seen since 2011. US retail sales in June remained unchanged, signalling consumer resilience and bolstering economic growth prospects for the second quarter. Treasury yields fell across the board. The 10Y yield fell 7.2bps at 4.16% a four-month low, and the 2Y yield eased 3.8bps on expectations that the Fed is getting close to cut rates. CME FedWatch tool indicates a 91.7% probability for a September rate cut.

ASX to rise. SPI Futures up 55 points (+0.69%).

COMMODITIES

• Gold sprints to all-time high as Fed rate-cut hopes boost demand.
• Iron ore slips, investors eye stimulus signal from key China meeting.
• Oil prices decline over 1% on Chinese demand jitters.
• Aluminium hits three-month low on heavy supply while copper also slips.
• Rio Tinto hails another step closer to develop Serbian lithium mine.
• Miner Barrick's quarterly gold and copper output edges higher.

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ASX 200 slipped 18 points to 7999 (+0.2%) as consolidation around 8000 the go. A big divergence again in banks and resources. RIO production numbers failed to launch, and the stock dropped 2.4%, with BHP under pressure too, down 1.4%. FMG showed a small rise. Lithium stocks remain depressed, and base metal stocks also eased, IGO down 0.7% and S32 off 1.4%. Gold miners holding up well, NST up 0.6% and NEM up 0.4%. Oil and gas mixed, and uranium stocks slipped back slightly. PDN down 1.6%, and BOE off 1.2%. Banks help steady with the Big Bank Basket steady at $227.78. CBA eased back with other financials better, SOL up 1.0% and CGF rising 1.6%. Insurers eased, Industrials mixed, ALL off 3.3%, with tech falling as WTC lost 1.2% and XRO down 1.4%. Utilities are also under a little pressure, ORG down 1.0% and AGL falling 0.9%. Retailers are taking a breather, with FLT giving back some gains down 2.3% and WEB down 1.2%. In corporate news, CSL won a contract for a new flu vaccine, HUB was up 0.2% on positive FUA inflows, and IGO fell 0.7% on some more impairments. In economic news, nothing locally, China saw its manufacturing sector growing 6.2%. Asian markets mixed again, Japan back from a holiday up 0.3% and HK down 1.3% with China -0.1%. 10Y yields falling to 4.25%. Dow Futures up 38 points. NASDAQ Futures up 47 points. 

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