Market Updates

Wall Street closed lower overnight, ending near worst levels a day before the release of key US inflation data that could influence Fed interest rate decisions. Dow Jones lost 191 points (-0.54%). Up 56 points at best. Down 256 points at worst. S&P 500 down 0.70%, and the NASDAQ shed 1.17%. The US dollar eased, and the US 10Y treasury yields fell 2bps. Meantime, demand for the new 10Y notes was high enough that investors were willing to settle for a yield of less than 4%. The US$38bn auction was awarded at 3.999%. Earnings season continues, Lyft fell 10.03% after the company reported its slowest revenue growth in two years, and Upstart shares plummeted 34.24% on disappointing guidance. Conversely, Casino owner Penn Entertainment's shares jumped 9.1% on a $2bn deal with Walt Disney's ESPN.

• ASX to rise. SPI Futures up 4 points (+0.05%)
• Gold dropped 0.53% ahead of US inflation report tonight.
• Copper rose 1.52% on stimulus bets as China sinks into disinflation.
• Nickel -1.75%, Aluminium -0.14%, Zinc +0.49%, Lead +0.52%, Tin +0.26%
• WTI and Brent rose 1.70% and 1.52% on US fuel demand and tighter supplies.
• 10Y Bond Yields mixed: US 4.02%, Australia 4.01%, and Germany 2.48%.

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US equity markets finished lower overnight, in a broad sell-off after Moody’s cut the credit ratings of 10-small to mid-sized US banks, reigniting fears about the health of the US banks and the economy. The Dow Jones closed 159 points lower (-0.45%), well off worst levels. Dow down 466 points at worst. S&P 500 dipped 0.42%, and the NASDAQ lost 0.79%. After a five-month rally this year, the S&P 500 and the NASDAQ were 5% off their lifetime highs, August has now recorded five losing sessions out of six. S&P 500 down 2% this month, with the NASDAQ falling 3.2%. Treasuries rallied with some curve flattening, the 3Y auction was well received. USD Index rose 0.47% after disappointing Chinese trade figures led investors to safer assets and the VIX at one point hitting a two-month high before closing up 1.4%. On the earning front, UPS off 0.88% after the company cut its 2023 revenue and margin forecast. Eli Lilly led the healthcare sector higher, +14.91% on upbeat earnings and outlook.

• ASX to edge lower. SPI Futures down 5 points (-0.07%).

Moody’s bank downgrades and warnings have put renewed scrutiny on banking sector stresses. Moody’s cut ratings to 10 small- to mid-sized lenders by one notch and placed six banking giants, including Bank of New York Mellon, US Bancorp, State Street, and Truist Financial, on review for potential downgrades. Moody's also warned that the sector's credit strength would likely be tested by funding risks and weaker profitability.

• Russell 2000 -0.59%
• S&P 500 Banks index has slipped 2.5% YTD vs 17.2% gain by the S&P 500.
• KBW Regional Banking index dipped 1.39%.
• Gold dropped 0.60% near a one-month low as the USD rallied.
• Copper fell 2.47% to lowest in almost a month on weak Chinese trade data.
• Nickel -1.09%, Aluminium -1.26%, Zinc -1.28%, Lead -0.54%, Tin -1.91%
• WTI and Brent rose 1.22% and 0.26% on US economic growth outlook.
• 10Y Bond Yields mixed: US 4.03%, Australia 4.00%, and Germany 2.44%.

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ASX 200closed flat, up 2 points to 7311 (+-%), losing early morning gains, with mining and financials balancing the market. Iron ore giants were mixed FMG up 0.4%, BHP down 0.6%, and RIO off 0.4%. Goldman predicts a fall in iron ore prices this year. Iron ore futures in Singapore have fallen 11.6% from its cyclical high last month. The “big four” banks were mixed CBA and NAB in the green while ANZ and WBC stumbled. Big Bank Basket up to $177.19 (+0.1%). Lithium stocks were broadly lower, AKE down 2.5%, SYA tumbled -13.2%, while PLS rose 2.7% on broker upgrades. Gold stocks tracked bullion prices lower, NST down 2.3% and NCM off 0.5%. Tech stocks tracked the Nasdaq higher, XRO +0.2% and WTC up 0.2%, while SQ2 fell another 0.2%. Energy sector was buoyed by gains in WDS and COE as oil edged higher. Industrials under pressure, MTS down 1.1%, WOW off 0.2% and DMP falling 0.2%. Healthcare doing ok. Insurers, not so much IAG, MPL, and SUN all losing ground. REITs fell with SCG down 0.7% and VCX off 1.6%. In corporate news, WDS +0.6% after announcing that it will sell 10% of its flagship Scarborough gas project. JHX jumped 14.6% on upbeat forecasts despite posting a decline in revenue and profits. MYR fumbled the ball, down 14.1% on results despite raising profit outlook. CRN off 11.6% on drilling results. In economics, Consumer confidence fell 3.4 points to 75 despite the RBA cash rate pause. In contrast, Australia’s business mood improved slightly; NAB’s business confidence index rose to 2 in July from a downwardly revised -1last month. Australian building permits fell for the third time this year, falling 7.7%, MoM and China Exports dropped the most in over three years down 14.5% MoM, the steepest decline since Feb-20. Asian markets mixed, Japan up 0.3%, and HK down 1.8% with China off 0.3%. Dow Jones futures down 92 points, and Nasdaq futures down 76 points.

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All three major US indexes closed higher on Monday, rebounding from their worst weekly fall since March, and ending near best levels, as investors position themselves ahead of Thursday’s CPI report due this week. Dow Jones saw its biggest advance in more than seven weeks, up 408 points (+1.16%). Dow at best up 432 points. S&P 500 halted a four-day drop, up 0.90%, and the NASDAQ gained 0.61%. The US dollar recovered from a one-week low, and the USD Index edged higher by 0.03%. Short-dated US Treasuries fell while 10Y yields rose after hitting November's peak. Treasury sales to test investor demand this week amidst the largest refunding auctions since last year. The market faces $103bn across 3, 10, and 30Y auctions this week, up $7bn from May. In corporate news, Berkshire Hathaway rose 3.4% after the company reported its highest-ever quarterly operating profit, Telsa slipped 0.9% after its CFO stepped down, and Apple fell 1.73% to book its longest losing streak of 2023.

ASX to bounce. SPI Futures up 29 points (+0.40%).

European markets ended mostly mixed but off worst levels. Focus in Europe on German industrial output for June missed estimates, Eurozone's August Sentix Investor Confidence improved but remains in contraction. UK's July Halifax house price index was below expectations. FTSE 100 0.14%, DAX -0.01%, CAC40 +0.08%, and STOXX 600 +0.09%. In Asia, equity markets mixed in a quiet day of trade. Japan reversed early losses to close slightly higher, up 0.41%. Hong Kong flat, off 0.01%, while mainland markets fell on steep falls in healthcare stocks Shanghai -0.59%, Shenzhen -0.83%, ChiNext -1%.

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ASX 200 drifted 16 points lower to 7309 (-0.2%) as iron ore miners and banks wallowed. WBC and ANZ, the worst performers ahead of CBA numbers Wednesday. The Big Bank Basket down to $176.94 (-0.2%). Insurers slid with QBE off 1.8% and SUN dropping 2.6%. MQG slightly firmer up 0.4% and GQG up 4.5% on better FUM numbers . GMG led the REITs bouncing as bond yields came under pressure, SCG up 1.1% and VCX rallying 0.5%. Healthcare was once again in ICU, RMD slipped 4.3% on downgrades, CSL dropped 1.1% and MSB continued to trade lower, down another 12.8%. Industrials were firm as TLS rose 0.5%, WES up 0.5% and BXB rallied 0.6%. Tech mixed, WTC up 0.6% and XRO off 1.2%. The All-Tech Index falling 0.6% as SQ2 dropped like a rock, down 10.1%. In resources, Lithium stocks came under a little pressure despite some good news in PLS up 3.8% and AKE up 2.4% but LTR and LRS both slid. Iron ore stocks once again under pressure, FMG down 1.6% and RIO off 0.8% with gold miners mixed. Oil and gas stocks were better as STO rose 0.3% and WDS up 0.6%. In corporate news, EHE rose 8.5% on news of the Scheme from Bain and the ACCC extended the ORG takeover decision again. PLS upgraded its resource, DHG saw its CFO leave for TPG and NIC has completed it haul road in Indonesia. Nothing on the economic front. Asian market weaker with China down 1%.10-year yields at 4.06%. Dow futures up 101 points. NASDAQ futures up 83 points.

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US markets concluded the week with losses all round as the latest batch of corporate earnings reports and new job statistics dampened market sentiment. The Dow Jones declined by 150 points (-0.43%). At its best, the Dow was up by 291 points, while at its worst, it was down 182. The S&P 500 and the NASDAQ experienced drops of 0.53% and 0.36%, respectively. These declines were primarily influenced by a substantial 4.8% decrease in Apple's stock value, stemming from disappointing quarterly results and a pessimistic outlook.

On the European front, markets showed a general upward trend on Friday. The FTSE 100 increased by 0.49%, the DAX rose by 0.39%, the CAC40 saw a gain of 0.84%, and the STOXX 600 index rose 0.33%. However, Europe's STOXX 600 index witnessed one of its most significant weekly drops (-2.44%) since July, primarily attributed to growing concerns about the region's economic growth due to increased speculation of a challenging economic environment.

• SPI Futures are down 11 points (-0.15%).
• 10Y Bond Yields: US 4.04%, Australia 4.05%, and Germany 2.52%.

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ASX 200 closed up 14 points to 7325 in a late surge. For the week the index dropped 1.1%. Banks held steady despite the ACCC knocking back the ANZ/SUN deal, The Big Bank Basket relatively unchanged at $177.25. MQG was slightly better up 0.8%, but REITs hit hard once again as 10-year yields continued to rise. Defensive healthcare stocks under pressure. CSL down 0.7% and RMD tumbled 9.3% after disappointing results. Industrials drifted higher at the close, WOW unchanged, COL off 0.2% and TLS falling 0.5%. Tech stocks finished better led by XRO up 1.5% and WTC up 1.9%. Oil and gas stocks continue to push higher as crude rising on production cuts. Iron ore miners shrugged off negativity and lower AUD with BHP up 1.1% and RIO rising 0.8%. Lithium stocks mixed and gold miners eased, NST down 2.3%. In corporate news, MSB collapsed 56.9% on an FDA update, SQ2 also fell hard on results down 5.8%.   On the economic front, China has lifted tariffs on Barley after a three-year absence. The RBA SOMP was released with a downgrade to growth forecasts, with GDP now at 0.9% in the year to December 23. In Asian markets, China and HK up around 1% with Japan flat. 10-year yields 4.18%. Dow futures up 87 points. NASDAQ futures 113 points. European markets opening around 0.5% higher.

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All three major US Indexes finished lower overnight after a choppy trading session as US bond yields hit nine-month highs and the dollar dipped following a US credit downgrade. Dow Jones fell 67 points (-0.19%). Dow at best up 66 points. Dow at worst down 160 points. S&P 500 posted its third straight decline, down 0.25% on track to break four-straight weekly gains. Tech under pressure as their rallies in July increased their already high sensitivity to surging treasury yields, NASDAQ down 0.1%. Treasury yields reached nine-month highs due to economic data suggesting easing inflation. The yield on 10Y Treasury notes rose by 10.7bps to 4.185%, while 30Y rates increased by 13.8bps to 4.302%. The rise in yields was attributed to investor positioning and market liquidity rather than fundamental factors. Meanwhile, the dollar remained steady against major currencies at $102.48, close to a one-month high. Among stocks, PayPal and Qualcomm tanked by 12.3% and 8.2%, respectively on poor corporate earnings.

• ASX to edge lower. SPI Futures down 7 points (-0.10%).

Apple Results: Apple -0.73% reported sales of $81.8bn, a 1.4% fall, but still higher than the expected $81.69bn. EPS rose 5% to $1.26, beating analyst estimates of $1.19. Despite iPhone sales slightly missing expectations, strong sales in China, with an 8% YoY growth, helped offset the global smartphone market decline. Apple's gross profit margin for the next quarter is expected to be between 44% to 45%, higher than the anticipated 43.4%. The company's research and development spending reached $22.61bn, driven partly by investments in AI. iPhone sales in China grew by "double digits," and services revenue reached $21.21bn with a record number of 1bn subscribers. The wearables business had revenue of $8.28bn. Mac and iPad sales were $6.84bn and $5.79bn, respectively.

• Russell 2000 -0.28%
• US ISM Services PMI fell to 52.7 from June's 53.9, below the forecast of 53, signalling a slowdown in services growth due to smaller increases in business activity/production.
• The number of Americans filing for unemployment benefits rose by 6k to 227k in the week ending July 29th, in line with expectations. Continuing claims increased by 21k to 1.7m during the same period, also meeting expectations.
• Gold was flat overnight, sitting at a 3-week low.
• Tin rose 2.76% as turmoil in Myanmar reduces supply.
• Copper +1.33%, Nickel +0.21%, Aluminium +0.75%, Zinc +0.7%, Lead +0.26%
• WTI and Brent gained 2.59% and 2.18% as Saudi Arabia and Russia maintain tight supplies.
• 10Y Bond Yields mixed: US 4.18%, Australia 4.13%, and Germany 2.57%.

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ASX 200 closed down 43 points to 7312 (-0.6%), sliding for a second straight session, tracking losses on Wall Street overnight. Tech led the laggards today, XRO -2.7%, REA -0.8% SQ2 -1.9%. All-Tech index down 1.0%. Iron ore miners slipped, tracking the softening price in Asia. BHP down 1.2%, RIO off 1.7% and FMG down 1.3%. Big four banks are all down. CBA -1.0%, NAB -0.6%, ANZ -0.4% and NAB -0.6%. Big Bank Basket down to $177.55 (-0.8%). Energy stocks struggled, WDS -0.7% and BPT -1.2%. Lithium stocks mostly down, MIN -0.6%, AKE off 1.6%, but PLS bucked the trend, up 1.4%. Healthcare had a bad day, but insurers found some support, QBE +1.2%, SUN +0.7% and IAG up 1.9%. Consumer discretionary/mum & dad stocks mixed WES off 0.3%, JBH down 0.9%, and QAN -1.1%. REITS weakened SCG off 1.1% and VCX down 1.0%. In corporate news, JHX down 2.8% on a new deal with US builder D.R. Horton, DOW -3.8% will recognise a $549m impairment in its upcoming financial results, BGL +3.1% reported “exceptionally high grade” gold hits in its drilling program, LNK -2.7% despite anticipating a 4.5% rise in revenue and EBIT surpassing guidance range. In economics, Australia’s trade surplus widened to a three-month higher of $11.3bn in June from a downwardly revised $10.5bn. Retail turnover fell by 0.8% MoM, marking the second time a drop in retail trade so far this year, as cost of living pressures weigh on consumer spending. Caixin China General Composite PMI fell to 51.9 in July the seventh straight month of growth in private sector activity but the softest pace since January. Asian markets mixed, Japan extending losses from the previous session, down 1.5%, HK and China up 0.5%. Australian bond yields higher, 10Y yield up 8bps to 4.10%. Dow Jones futures up 20 points, and Nasdaq futures down 18 points.

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