Market Updates

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Wall St finished the week lower on Friday night as the presidential debate prompted new political uncertainty, outweighing easing inflation data. The S&P 500 fell 0.41% after touching a fresh intraday record high of 5.5k. The Dow Jones eased 45 points. The NASDAQ lost 0.71%, while the Russell 2000 found buyers, up 0.46%. For the quarter the NASDAQ gained 8.3%, the S&P 500 gained 3.9% while the Dow lost 1.7%. Tech outperforming once again.

High ranking Democrats over the weekend dismissed calls that Biden should be replaced by a younger candidate following his shaky debate on Friday. Polls indicated Democrat voters who think he should not be running for president rose from 36% to 46%. In economics, the US PCE price index rose by a mere 0.08% in May, representing the smallest increase since late 2020. This deceleration increased chances for rate cuts later this year. Consumer spending rose by 0.3% in May after falling in April, supported by solid income growth. These developments suggest that inflation pressures might be easing without causing substantial harm to consumers. Despite the positive inflation results US bond yields gained 9.6bp (10Y) and 3.1bp (2Y), pressuring mega-cap stocks. Meta was the worst of the Magnificent Seven, down 3%. Nvidia near flat.

ASX to fall. SPI futures down 35 points.

In Europe, Marine Le Pen’s far-right National Rally (NR) Party won the first round of French elections yesterday. 34% of the vote vs Macron’s ~20%-23%. The outcome will now depend on whether centre-left and centre-right parties combine forces to oppose the NR. This historically has happened. If no party reaches 50% majority after the first round, voting will go to a second round later this week.

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ASX to rise. SPI Futures up 26 points (+0.34%). Wall Street edged higher overnight following a choppy trading session amid mixed economic data ahead of tomorrow's PCE reading. The Dow Jones and S&P 500 ended flat, both up 0.09%, while the NASDAQ managed to eke out a small gain of 0.30%. Big night on the economic front, data showed US manufactured goods unexpectedly fell in may, while core durable goods orders eased 0.1%, vs expectations for a 0.2% rise. Bolstering bets the weaker economy may prompt the Fed to cut rates in September. US weekly job claims fell to 233k, missing expectations of 236k, and the final print of US GDP growth was revised higher in Q1 2024 to 1.4%. US treasury yields eased dropped after data showed a continued but moderated slowdown in economic activity. Benchmark 10Y yield fell back below 4.3% after reaching an over-two-week high of 4.35% earlier in the session. 2Y yield fell 4.2 basis points. Japan issued fresh warnings of currency intervention with Finance Minister Shunichi Suzuki reiterating that officials will take necessary actions, though didn’t mention on what yen level.

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The ASX 200 has finished the day down 23 points (-0.3%) to 7760, staging an impressive 106-point turnaround. The recent CPI induced spike in bond yields triggered an excuse for a morning sell-off. Tech was the best performing sector, supported by a solid lead from the NASDAQ. WTC rallied 4.1% from a morning low (94.41) to finish up 2.5%. RMD up 4.1% helped Healthcare (best in the top 100). The stock slowly finding its feet again and outweighing losses in CSL and COH (both near flat). REITs had an awful day, suffering a double hit of ex-dividends and rising bond yields. SGP, GPT and MGR the worst of the worst. Down 4.6%, 5.9% and 6%. Wiping off nearly a billion dollars in market cap from those three alone. GMG only down 0.9%. Continues to act closer to a tech stock than REIT. Banks also experienced a nervous CPI/bond yield sell-down. Mortgage stress related concerns winning out over expanding margin expectations. CBA, NAB, WBC and ANZ down between 0.6% and 0.8%. All off lowest levels similar to the index as a whole. Consumer discretionary stocks performed better than yesterday. BBN jumped 19% after confirming guidance.

In commodities the iron ore giants finished mixed. A slow expansion in Chinese industrial profits not doing much to ignite the sector. BHP, RIO and FMG -0.4%, +0.5% and +0.2%. Lithium also had a mixed session. The short-sharp bounce from yesterday only following through for some. PLS up 0.9%. LTR and LRS down 0.5% and 2.7%. Uranium managed to rise from oversold levels, nothing convincing yet. BOE (+2%) outperformed PDN (+0.2%). Still consolidating from its recent capital raise announcement. It provided the market with a guidance update today.

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US equities closed broadly higher overnight following a choppy day of trade. The Dow edged up 16 points (+0.04%). Up 72 points at best. Down 203 points at worst. The S&P 500 rose 0.16% and is on pace to enter the second half of the year with a gain of ~15% YTD. The tech-heavy NASDAQ advanced 0.49%, locking in the gain before big tech got hit too hard in late trade after Micron Technology’s outlook missed expectations. US small caps Russell 2000 eased 0.12%, and Wall Street’s Fear Index, the VIX, fell 2.26%. US treasuries rose amid higher inflation data in other countries. 10Y yield +8.2bps, 2Y yield +0.9bps, and the 5Y $70bn note auction was well received. Pressure is mounting on the Japanese yen, sinking to a 38-year low against the USD as the wide interest rate differentials between the two economies favour the greenback. Markets are speculating that Japanese officials will intervene but will likely wait until after the PCE reading on Friday. A top currency official Masato Kanda warned on Monday that authorities were standing by, ready to intervene 24 hours a day if necessary.

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ASX 200 tumbled 56 points to 7783 (-0.7%), giving back some of yesterday’s gains following hotter-than-expected inflation data. Inflation rose 4.0% YonY in May, faster than April's 3.6% and above consensus of 3.8%. Aussie dollar jumped 0.6% to 66.86c, hitting a two-week high, and the 10Y yield and 2Y yields jumped 10bp and 18bp. Most sectors are in the red. Tech stocks outperformed their peers, taking cues from Wall Street overnight, despite a sharp rise in bond yields. All-Tech Index up 0.20%, and XRO gaining 1.1%. Energy stocks found buyers, as WTI futures rose above $81 per barrel despite rising US stockpiles. WDS +1.3%, and STX up 2.2%. Big banks took a hit today as higher for longer rates will continue to pressure bank NIMs. CBA NAB, ANZ and WBC down between -0.6% and -1.3%. Uranium stocks no good, while some lithium stocks kicked higher despite commodity weakness which saw the front-month China lithium carbonate futures fall 5% to $US12k a tonne on Tuesday. PLS +2.5%, and LTR up 3.3%. Gold miners and base metals were sold off. Iron ore behemoths no better, BHP, RIO, and FMG all lower. Rate-sensitive REITs and consumer-discretionary also down. On the corporate front, HVN was down 8.3% after Barrenjoey cut their valuation of the stock. BMN enters a trading halt as the company launches $76m cap raise. SGR flat on new CEO announcement. Asian markets higher, Hang Seng up 0.2%, TOPIX up 0.6%, Shanghai Composite up 0.1%, paring earlier losses though hovering around four-month lows. Dow Futures up 7 points. NASDAQ Futures up 43 points.

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Another floppy start.. US equities ended mixed overnight. The NASDAQ rallied 1.26%, buoyed by gains in chip stocks and Nvidia, up 6.8% bouncing back from a three-session sell-off. The S&P 500 rose 0.39%, snapping a three-day losing streak, while the Dow tumbled 299 points (-0.76%). Up 12 points at best. Down 414 points at worst. US Treasury yields finished near flat line. During trade, the yield curve inversion between the 2Y and 10Y notes deepened to more than 50bps for the first time this year before reversing after strong demand at the 2Y auction nudged that yield off its high. In economics, the US consumer confidence index eased in June amid worries about the economic outlook. The index fell to 100.4 from a downwardly revised 101.3 in May. In Fed speak, more hawkish commentary from Bowman stating it is not yet appropriate to cut rates, and she remains open to hiking rates should inflation progress stall. Bitcoin topped 62k, rebounding from heavy fund outflows the day prior, and the USD Index gained 0.14%.Why not sign up for a free trial? Get access to expert market insights and manage your investments with confidence.

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The ASX200 has finished the day up 105 points (1.36%), bouncing back strongly from yesterday’s sell-off. The Energy sector went from worst to best following the overnight oil price rise and bargain hunters circling in. WDS up 3.7%, its best session of the year and KAR up 2.3%. Real Estate was next as bond yields fell. GMG up 0.9% and SGP up 3%. Commodities finally took a break from selling. The big miners had the best recovery despite the iron ore price falling for a fourth straight session. BHP and RIO up 2.1%, FMG up 1.9%. Copper also did well. SFR and 29M up 2.7% and 4.7%. Lithium was mixed. Uranium modestly higher, excluding PDN which recovered 2.7% from its opening drop on resumption of trade. Finishing down 5.1%. JHX rose 4.6% as buyers slow reacted to yesterday’s guidance update. Best performer in the ASX 200. Big banks joined in the rally as Australian consumer confidence improved. NAB up a huge 2%. CBA, WBC and ANZ up 1.4%, 1.2% and 0.6%. Consumer Discretionary also doing well. ALL up 2%. CKF jumped 7.3% on impressive full year results. In Health Care, RMD recovered a small 1.2% after its battering yesterday. Better than CSL, worse than COH. Finally, Tech held on to a small gain. Focussing on the ASX for a change instead of the NASDAQ’s overnight drop. WTC finished flat.

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Wall Street ended mixed overnight, losing traction after Nvidia fell 6.7% extending a three-day rout raising speculation that the AI rally powering the bull market is taking a breather. The Dow kicked off the week rallying to a one-month high, though off best levels, up 261 points (+0.67%). Up 421 points at best. The S&P 500 and the NASDAQ fell 0.31% and 1.09% following a rotation out of tech stocks. PHLX Semiconductor Index also fell 3.02%, dragged down by Taiwan Semiconductor Manufacturing, Broadcom, Marvell Technology, and Qualcomm falling between 3.53% and 5.7%. US Treasury yields were largely unchanged, 10Y and 2Y yields easing a touch, ahead of key economic and Inflation data later this week. Quite on the Fed speak front, though Daly struck a bearish tone stating she doesn’t believe the Fed should cut rates before policymakers are confident inflation is headed toward the 2% target. Money markets pricing in a 61.1% chance of a rate cut in September according to CME FedWatch Tool.

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