Market Updates

Wall Street ended lower overnight night after the FOMC minutes showed bank officials were divided over the need for more interest rate hikes at their last meeting. Dow Jones down 181 points (-0.52%). Up 187 points at best. Down 189 points at worst. S&P 500 off 0.76%, slumping for a second day in a row, and NASDAQ slid 1.15% as tech behemoths dragged. Treasury yields climbed, reaching levels not seen in 15 years, (10Y yield rose past the 4.25% mark its highest since Nov-07) due to conflicting signals in meeting minutes and robust industrial production figures pressuring the tech sector as Meta -2.5% and Tesla -3.2%, as well as key semiconductor companies AMD -3.7% and Intel -3.6%. Conversely, Target rose 3% after beating Q2 profit estimates. USD Index rose 0.22%, rebounding from earlier losses and posted its fifth straight day of gains and gains. Gains in the dollar and treasury yields weighed on Gold, down 0.52%, hovering at its lowest level since March.

• ASX to open lower. SPI Futures down 23 points (-0.32%).
• Gold dropped 0.52% easing as FOMC provides insight into further rate hikes.
• Copper fell 0.21% hovering above a 7-week low.
• Nickel +0.4%, Aluminium flat, Zinc -0.52%, Lead -0.35%, Tin -0.14%
• WTI and Brent dropped 2.05% and 2.06% as Chinese demand fears counter tight US supplies.
• 10Y Bond Yields higher: US 4.26%, Australia 4.24%, and Germany 2.67%.
• The likelihood that the Fed will hold rates at its next meeting at 88%.
• US housing starts rose by 3.9% MoM exceeding expectations.
• US Industrial production rose 1% MoM, the most in six months, significantly above market expectations of a 0.3% rise.
• US Manufacturing production rose 0.5% MoM, rebounding from an upwardly revised 0.5% fall in June, exceeding market expectations of a flat reading.
• Russell 2000 -1.28%

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Blood on the streets on the ASX 200 today,  market down 110 points to 7195 (-1.5%), posting its biggest drop in six weeks. REITs put up some resistance following solid earnings reports VCX +2.4%, MGR +5.3% and SCG +1.5%. Energy stocks fell, as crude oil fell for a third day after a drop in US inventories, STX off 3.5%, BPT down 2.8% and WDS -0.9%. Tech stocks tracked the Nasdaq lower, SQ2 -4.0% and WTC down 3.7%. All-Tech Index down 2.4%. Iron ore giants BHP, RIO and FMG all lost over 2%. The big four banks were all negative; CBA went ex-dividend today down 3.6%. Big Bank Basket down 2.5% to $174.79. Bullion prices were steady, but gold stocks were caught in the broad market sell-off NCM down 1.3% and EVN off 1.7%. Industrials weaker across the board; construction stocks were slammed dragged lower by FBU -9.3% disappointing earnings report. Healthcare eased, but RMD managed to buck the trend up 0.1%, CSL off 0.4% and RHC down 1.8%. Elsewhere, WES down 0.8%, QBE off 1.0% and MIN falling 3.6%.

In corporate news, lots of results today ahead of a Super Thursday tomorrow. TCL down 0.7% despite toll income rising 26%, CPU down 3.3% reported revenue jumped 27% and flagged a $750m share buyback, BAP up 5.5% despite margins getting squeezed, the company kept its final dividend, and NWL down 1.6% recorded record EDITDA and a 26.3% jump in FUA.

In economics, RBNZ leaves rates on hold. China’s new home prices fell 0.1%, marking the fifth decline this year amid a prolonged property crisis. Asian markets are lower on concerns over China’s stuttering economy, Japan down 1.3%, HK down 1.4% nearing a two-month low, and China off 0.5%. Australia’s 10Y yield down 6bps to 4.19%. Aussie Dollar sinks to nine-month lows down 0.1% to 64.51c. Dow Jones futures down 5 points, and Nasdaq futures up 6 points.

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US equity markets fell sharply overnight after stronger-than-expected retail sales data showed continued consumer resilience which stoked concerns that interest rates could stay higher for longer. Dow Jones fell 361 points (-1.02%). Dow at worst down 399 points. S&P 500 down 1.16%, falling below its 50-DMA for the first time in more than three months, halting a streak momentum that was by this measure the longest since Sep-20. NASDAQ shed 1.14%. US 10Y treasury yields briefly hit 10-month highs, reaching as much as 4.274% before dipping lower again. Shorter-dated US Treasuries went higher amid a global bond sell-off, then dipped after moving above 5%. Wall Street’s fear gauge, the VIX, jumped 11.1%. Among shares, big banks including JPMorgan -2.5%, BofA -3.2%, Citigroup -2% and Wells Fargo -2.3% fell following a Fitch rating analyst comment on CNBC. On the earnings front, Home Depot rose 0.7% after the retailer reported a smaller-than-expected drop in quarterly sales.

• ASX to fall. SPI Futures down 75 points (-1.04%).
• Gold dropped 0.33% steadying at the USD pulls back.
• Copper fell 1.35% hitting a 6-week low on weak China data.
• Nickel -1.67%, Aluminium flat, Zinc -1.91%, Lead +1.38%, Tin -1.03%
• WTI and Brent dropped 1.75% and 1.36% on further worries regarding the Chinese economy.
• 10Y Bond Yields mixed: US 4.22%, Australia 4.23%, and Germany 2.69%.

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ASX 200 rallied 28 points to 7305 (+0.4%) as results dominated today. Big names hitting the boards, CSL, COH, and NAB trading update. The banks were solid but unspectacular with the Big Bank Basket rising to $179.26 (+0.1%) after NAB quarterly update. NAB up 1.3% on a new buyback. Insurers bounced back on higher yields with QBE leading the charge up 1.3%, SUN up 1.6%. Healthcare in recovery ward today after CSL beat lowered expectations, up 3.7% and COH kicked 5.7%. RMD continue to push higher after recent falls up 1.3% and RHC doing well too. REITs mixed, GMG down 0.6% and SCG up 0.7%. Industrials mainly positive, WOW up 0.4%, TCL up 0.4% and SVW putting on another 1.0%. Tech better too, WTC up 1.3% and XRO doing well up 2.0%. The All-Tech Index rose 1.1%. Resources once again a little unloved. Big miners struggled, BHP down 0.3% and RIO off 0.4% but FMG found some friends, up 1.0%. Lithium stocks remain under pressure, PLS down 3.4% and MIN off 0.9%. Gold miners slid, led by NCM down 1.5% and NST down 1.9%. Oil and gas stocks steady, coal miners a tad higher, WHC up 2.7%.

In corporate news, a deluge of large-cap results today, SEK disappointed on growth options falling 4.3%, 360 produced some very positive results running 12.3% higher. Not so for TPW falling 4.5% on numbers, GUD up 14.9% on Gud results. LKE rallied hard on Kachi test results, up 16.7% and MAY fell 33.3% on Cuban disappointment.

In economic news, RBA minutes and wages growth numbers. Asian markets mixed as China cuts some rates and Japan shows a 6% GDP rate. 10-year yields pushing higher again up to 4.27% on RBA Minutes. Dow futures up 4 points. NASDAQ futures up 45 points.

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US markets finished a choppy session higher on Monday. The Dow edged higher, up 26 points (+0.07%). Dow at best up 54 points. Dow at worst down 111 points. Big tech drove the S&P 500 and NASDAQ higher, +0.58% and +1.05%, respectively, boosted by a 7.1% jump in Nvidia after Morgan Stanley named Nvidia the bank’s “top pick” ahead of the chipmaker’s quarterly reports. This move sent other mega-cap tech stocks higher, Amazon +1.6%, Alphabet +1.3%, and Meta +1.5%. Meanwhile, Tesla lost 1.2% after announcing a cut in prices for the Model Y.  The Dollar Index rose 0.34% to 103.16 after hitting its highest level since July. The safe haven appetite drove up US Treasury yields, the 10Y yield hit 4.215%, the highest since November, before falling back to 4.201%.

• ASX to open flat. SPI Futures flat.

European stocks closed mostly higher overnight, rebounding from a near one-week low as gains in retail and healthcare outpaced the losses in miners and energy. STOXX 50 +0.2%, FTSE -0.2%, CAC +0.1%, and DAX +0.5%. European miners and energy stocks led losses tracking lower crude oil and base metal prices on deteriorating demand outlook in China. Asian equities were almost lower everywhere Monday, led lower by the Hang Seng -1.58% in particular its property stocks. Greater China markets were lower, Shanghai -0.34%, Shenzhen -0.50%, ChiNext -1.02% weighed down by consumer discretionary and staples.

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ASX 200 fell 63 points to 7277 (-0.9%) as more Chinese woes hit confidence and iron ore losses mount in Asian trade. The big miners slid, BHP down 2.1% and FMG off 1.8%, with lithium stocks under pressure, PLS down 6.0%, and AKE dropping 3.9%. Base metal stocks eased too with gold miners holding in places. Oil and gas stocks gave up early gains as oil lost 1% in Asian trade. Coal stocks drifted lower with WHC down 1.2%. Banks were softer as BEN reported and lost 2.9%. CBA is down 0.7% and the Big Bank Basket at $179.01 (-0.8%). Insurers slid with SUN down 1.9%. Money managers also sliding lower. Healthcare lost ground with CSL under pressure yet again down 1.2% ahead of numbers tomorrow. RMD bucked the trend up 1.9%. REITS slid on higher yields; Tech eased with the All-Tech Index up 0.8% with XRO off 0.3%. Rate-sensitive industrials fell, TCL off 1.1% and REA off 0.8% as analysts digested recent results. In corporate news, CAR reported and rose 7.0%, JBH held up well on better numbers than expected, rising 2.8%. GWA posted a good result rising 7.5% and BPT disappointed yet again and slid 3.6% on lower revenue numbers. Nothing on the economic front. Asian markets wobbled on China woes, Japan down 1%  HK down 2.1%, China down 0.4%. 10-year yields holding at 4.21% and the AUD under pressure below 65c. Dow futures down 64 points and NASDAQ futures down 24 points.

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US markets experienced a general decline last week as they absorbed fresh inflation data and evaluated the future trajectory of the Fed's interest rates. The Dow increased by 105 points (+0.30%) on firday, reaching its peak with a gain of 179 points, but also experienced a low point with a decline of 116 points. The S&P 500 registered a slight decrease of 0.11%, while the NASDAQ faced a more significant loss of 0.68%. This decline was attributed to a sell-off in shares of companies like AMD (-2.4%), Micron (-1.6%), and Nvidia (-3.6%), resulting in their second consecutive week of losses. The rise in produce prices, which reflect the costs paid by wholesalers for raw materials, was 0.3% MoM, marking the most substantial increase since January and surpassing the expected 0.2%. This development led to speculations that the Fed might need to maintain higher interest rates for an extended period.

• Russell 2000 +0.13%, down 1.65% for the week.
• US Michigan consumer sentiment edged lower to 71.2 in August from 71.6 in July, beating expectations of 71.
• USD Dollar Index hits a five-week high of 102.86, boasted by a higher-than-expected rise in producer prices.

HEADLINES

• ASX set to fall as earnings, wage costs, jobs data top agenda.
• Sluggish US earnings may need pick-me-up to support 2023 stock rally.
• Stocks fall, yields rise after hotter than expected inflation reading.
• Contact Energy declares NZ21¢ final dividend.
• SkyCity books $45m provision for potential AUSTRAC penalty.
• Goldman’s final take on US second-quarter results.
• Be wary of the dovish inflation narrative: Scotiabank.
• Earnings to gather pace this week.
• China condemns visit of 'troublemaker' Taiwan VP to US.
• US, China agree to double weekly flights between countries.
• Novo eyes other health benefits from weight-loss drug Wegovy after major trial.
• Trump heading for Republican 'coronation' as 2024 rivals struggle to stop him.
• SoftBank in talks to buy Vision Fund's 25% stake in Arm -sources.

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ASX 200 slid 17 points to 7340 (+0.24%) in quiet trade dominated by results again today. For the week the index is down 0.85%. Broad based weakness today, Banks eased after CBA results and Phil Lowe talked up rates in Canberra. The Big Bank Basket down to $180.46 (0.1%). Insurers mixed, QBE slipped 0.3% despite broker upgrades. Fund managers also squeezed slightly higher. MFG up 1.8%. Industrials were flat, healthcare better led by CSL up 0.6% and RMD up 0.6%. REITS slightly firmer with GMG down 0.4% the exception. Tech stocks eased back with XRO down 0.2% and WTC falling 1.5% with the All-Tech Index down 0.4%. In resources, iron ore stocks down again, FMG off 2.2% with RIO now ex-div falling another 0.6%. Lithium stocks on the nose today with PLS down 1.1% and MIN off 1.7%. Energy stocks also weaker, WDS down 2% on crude falls and strike threats. STO off 1.6% with coal stocks sold down, WHC off 2.0% and BCB down 4.2%. In corporate news, SGR is up 18.0% on a softly, softly NSW government, NCK rose 13.3% so far so good, CTT founder sold down, stock up 5.4% and BBN fell 1.9% on well-guided results. In economic news, it was all about the US CPI, although Phil Lowe spent his last uncomfortable day in Canberra with some regrets he had a few. Too few to mention. Asian markets weaker, China down 1.3% and HK off 0.7%. Japan closed for Mountain Day. Dow futures up 29 points. NASDAQ futures 23 points.

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US equity markets finished slightly higher overnight, ending near best levels as inflation worries ease. Dow Jones up 53 points to (+0.15%). Up 455 points at best. Down 16 points at worst. S&P 500 muted, up 0.03%, and the NASDAQ gained 0.12%. US treasuries firmed. 30Y yields climbed after a US$23bn auction was awarded the highest rate since 2011. 2Y yields reversed an earlier slide and the 10Y yield rose about 10bps to 4.1%. Oils rally, driven by signs of a tightening market, paused as technical barriers stalled further advances. On the earnings front, Alibaba rose 3.7% after the company’s quarterly results topped forecasts and Disney jumped 4.8% despite posting mixed results and announced an upcoming price hike.  

• ASX to fall at open. SPI Futures down 20 points (-0.27%).

US headline annual inflation rose 0.2% MoM, in line with consensus. Up 3.2% YoY accelerating from 3% in June. Core CPI (ex-food and energy) is also up 0.2% MoM, matching forecasts. Up 4.7% YoY from 4.8% in June, below expectations of 4.8%. Results support disinflation and peak Fed narrative aka the “Goldilocks” narrative.

Major bourses in Europe rose overnight, but off best levels following positive inflation figures in the US. STOXX 50 +1.6% FTSE +0.4% DAX +0.9%, and CAC +1.5%. In Asia, markets were mostly higher Nikkei +0.84%, Hang Seng +0.01%, Shanghai Composite +0.31%. Growing debate whether China’s deflation could spill over into US and the global economy. JPMorgan analysts suggest a potential -70 basis point spillover to global core goods inflation and a connection between US CPI and China PPI movements. Macquarie strategists highlight that China's reduced demand could ease pressure on global supply chains, influencing the Fed's rate decisions, yet uncertainty remains due to commodity price fluctuations.

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ASX 200closed up 19 points to 7357 (+0.3%) in a subdued day of trade. US CPI data tonight key. Energy sector is the top performer today as oil prices jump over US$84 a barrel, intensifying concerns that resurgent inflation will force central banks to raise rates further. STO, BPT and STX all gained over 2%. Coal stocks doing even better, YAL +4.8%, WHC +4.3% and NHC +5.8%. The big four banks let go of yesterday’s gains. WBC the only bank big bank in the green, up 0.3%. Big Bank Basket slipped 0.2% to $180.61. Tech stocks faced a digital dilemma today, with most struggling while others managed to debug their losses. XRO  slid 3.7%, WTC off 1.0%, while DDR rose 1.4%. All-Tech Index up down 0.9%. REITs rose despite rising bond yields, MGR up 1.3% and SGP +0.7%. Healthcare stocks showed resilience, nursing a small gain. CSL +0.8%, COH +0.8% and MSB +5.7%. Insurers were good to SUN +1.4% and IAG up 1.5%. Industrials held steady, WES +1.2%, JHX +0.9%, but A2M slipped 2.5%. Iron ore giants mixed BHP and FMG gained, while RIO fell another 2.8% as it went ex dividend. Gold down, ahead of US CPI results. In corporate news, CCT jumped 12.1% on revenue results, DOW off 6.4% reported a $386m annual net loss, QBE down 1.2% on results, AMP up 4.6% raises full-year profit forecast, and LRS flat, on positive deposit results. In economics, Australia’s inflation expectations eased to 4.9% in August from 5.2% the previous month. Asian markets mixed. Japan up 0.9%, HK down 0.7% tracking Wall St overnight, and China down 0.1% on weak sentiment. Australian 10Y yield and 2Y yield up 4bps. Dow Jones futures up 139 points, and Nasdaq futures up 63 points.

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