Market Updates

US markets were lower overnight, ending near worst levels, following hot labour market data and a ramp-up in treasury issuance just a day after a US credit downgrade by Fitch. Dow Jones down 348 points (-0.98%). Dow at worst down 404 points. S&P 500 notched its worst day since April, down 1.38%. Tech-heavy NASDAQ off 2.17%, its worst day in five months. Wall Street’s “Fear Guage” the VIX climbed the most in five months, up 15.5%. US 10Y treasury yields hit the highest levels since November, and the USD Index rose 0.28%. Among stocks, AMD's earnings declined by 7% despite reporting upbeat earnings, mainly due to a disappointing outlook. Starbucks' stock rose by 0.9%, although the company's sales fell short of expectations.

• ASX to fall at open. SPI Futures down 58 points (-0.79%).
• ADP July report shows private payrolls rose by 324K, significantly above the 183K consensus but falling below June's 497K. The report supports soft-landing scenarios but contrasts with the latest JOLT report showing low job openings.
• Russell 2000 -1.37%
• Gold lost 0.54%, as US yields increase.
• Copper fell 1.56% after the USD continues to rise.
• Nickel fell 3.47% to a 3-year low as Indonesian supply continues to increase.
• Aluminium -1.73%, Zinc -2.65%, Lead +0.35%, Tin -1.39%
• WTI fell 2.30% and Brent fell 2.89% as US crude stockpiles fall by the largest on record in one week.
• 10Y Bond Yields gaining: US 4.09%, Australia 4.03%, and Germany 2.49%.

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Blood on the streets in the ASX 200 today, the market closed down 96 to 7355 (-1.3%) in a broad market sell-off, losing yesterday’s gains and then some as heavyweight banking and mining stocks weighed. All sectors finished in the red today. Iron ore giants BHP, RIO and FMG all lost over 1% each. Gold stocks not so golden today, NST and NCM down 2.7% and 0.7%, respectively. Lithium stocks sad, LKE off 4.4% and MIN down 1.9%. The big four banks ended in negative territory, with CBA the biggest laggard, down 2.3%. The Big Bank Basket was down to $178.90 (-2.1%). Interest rate-sensitive Tech no better. SQ2 down 1.8%, and XRO off 0.1%. Defensive sectors had no defence against the broad sell-off, Healthcare and Telecoms stocks lower. REITS stumbled, down 2.0%, GMG -2.4%, CHC -3.8% and SGP -1.6%. In corporate news, BWP -3.3% results disappointed, PSI up 2.1% set to surpass earning guidance, HLO +1.4% upgraded FY23 earnings guidance, ASN up 6.5% produces its first battery grade lithium carbonate, and TBN +3.3% signed binding letters of intent with ORG, AGL, Shell and EnergyAustralia.  In economics, Ai Group Australian Industry Index fell to -14.7, continuing its contraction for the 15th month straight. Asian markets fall as Fitch fallout sours sentiment. Japan down 1.5%, HK off 2.1% and China down 0.9%. Australian bond yields higher 10Y yield up 5bps and 2Y yield up 1bps. Aussie dollar is down 0.6% to 65.73c. Dow Jones futures down 109 points, and Nasdaq futures down 101 points.

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Wall Street closed mostly lower overnight in an uneventful session as the latest slew of corporate results came in mixed. The Dow Jones rose 71 points (+0.20%). Up 120 at best. Down 33 at worst. Meanwhile, the S&P 500 and NASDAQ dipped by 0.27% and 0.43%, respectively. US treasury yields rose, with the 30Y paper touching a new year high. Conversely, gold prices fell, weighed down by a stronger dollar and an uptick in bond yields. Among stocks, Merck & Co lost 1.3% despite exceeding sales expectations. Pfizer retreated 1.2% despite upbeat results. Caterpillar surged 8.8% on better-than-expected earnings and revenue but warned of a potential Q3 sales and margins decline, and ISM Manufacturing PMI indicated a ninth month of factory sector contraction.

• ASX to fall at open. SPI Futures down 39 points (-0.53%).

HEADLINES

• ASX to fall, S&P 500 slips on earnings misses. Iron ore falls.
• Gloomy data makes investors more cautious on world economy.
• Fitch cuts US government's AAA credit rating by one notch
• U.S. Treasury posts sharply higher $228bn June deficit
• Apple heads for largest Q3 revenue drop since 2016 as iPhone sales slow.
• Meta starts blocking news in Canada over law on paying publishers.
• US Fed officials see pathway to soft landing.
• AMD forecasts challenger to Nvidia AI chip to launch in 4th quarter, shares rise.
• TSMC leads in advanced chip packaging wars, LexisNexis patent data says.
• A double dose of the U.S. Treasuries and dollar 'pain trade' bites Asian markets.
• Starbucks misses quarterly sales estimates, China sales buoy.
• Marriott lifts annual profit forecast on China rebound.
• BlackRock, MSCI draw scrutiny from US House Committee on China.
• Insurer AIG profit beats estimates on gains in life and retirement unit.
• HSBC rides rising rates to double its income, launches $2 bln share buyback.
• US job openings hit more than two-year low; labor market still tight.
• World factory activity mired in slump as China, growth slowdown take toll.
• US construction spending rises strongly in June.
• US says formally invites new Chinese foreign minister Wang Yi to Washington.
• Caterpillar's 2023 margin forecast, upbeat results send shares to record high.
• Uber shares fall as fears over Lyft's pricing eclipse first operating profit.

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ASX 200 up 40 points to 7451 (+0.5%) as shares rallied slightly further in the afternoon after the RBA announced it was leaving the cash rate unchanged. The Aussie dollar fell 0.8%  to 66.66c, and bond yields took a hit. 2Y and 10Y bond yields fell 9bps and 8bps, respectively. Gold miners were golden today thanks to Lowe, NCM up 1.4%, EVN up 2.4% and NST +1.6%. Major iron ore miners rose following last week’s declines tracking a higher iron price. The big trio BHP, RIO and FMG all in the green. Lithium bounced back from Monday’s sell-off, IGO +3.2% and LTR +2.2%. Energy stocks good. WDS up 0.5%, STO up 0.8%, but STX stumbled, down 9.0% on news that a deal couldn’t be reached with its offer to TPD. Tech stocks did well. SQ2 up 2.6% and XRO up 1.4%. Defensive sectors, Healthcare and Telecoms in good condition.TPG the star on Vocus interest. REITS higher as bond yields fell. SCG +0.7%, GMG +0.6% and URW up 1.7%. Banks higher, with the Big Four all up. Big Bank Basket up to $182.74 (+0.3%). In corporate news, AKE up 0.5% on Mt Cattlin drill results, LYC +3.0% after signing a follow-on contract with US Defense to increase HRE cost contribution to $258m, ADH up 5.9% on agreement with DHL to take over operational control of its NDC from September, STA fell 22.7 % after completing institutional placement raising $33m. On the economic front, RBA left interest rates unchanged at 4.1%, and Consumer confidence rose by 3.2bps last week to its highest level since April. Asian markets mixed, Japan up 0.6%, HK and China down 0.4% and 0.2% respectively. Dow Jones futures down 13 points, and Nasdaq futures down 3 points.

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US equities finished in the green overnight on July’s last trading day, closing near best levels. Dow Jones up 100 points (+0.28%). Up 108 points at best. Down 29 points at worst. S&P 500 and NASDAQ added 0.15% and 0.21%, respectively. All three major indexes ended with gains for the month, Dow +3.32%, and the S&P 500 and NASDAQ jumped 2.9% and +3.8% marking the fifth positive month in a row. US treasuries edged lower, and the US dollar ticked up as the Yen slipped. On the corporate front, Chevron +3% supporting the Dow, after Goldman Sachs upgraded the company to buy from neutral, and Disney +3.2% after the Financial Times reported that the company brought back its former executives.

• ASX to open higher. SPI Futures up 25 points (+0.34%).

European shares closed higher on Monday, driven by gains in healthcare stocks and a report indicating a further easing of euro zone inflation in July. However, optimism about a rate hike pause was tempered by upbeat growth data. FTSE 100 +0.07%, DAX -0.14%, CAC40 +0.29%, STOXX 600 +0.12%. Asian equities advanced on Monday, Nikkei rallied to a four-week high +1.26%, Hang Seng extended last week’s rally by +0.82%, and Shanghai Composite up 0.46%. Greater China markets extended gains, Shanghai +0.46%, Shenzhen +0.75%, ChiNext +0.77% as Beijing unveils more measures to boost consumption.

• Eight of the top 10 S&P 500 sectors posted gains, led by a rise in energy stocks.
• Gold gained 0.26%, as rate-hike nears end.
• Copper rose 1.81% to a one-month high on hopes of China stimulus.
• Nickel flat, Aluminium +2.88%, Zinc +2.36%, Lead flat, Tin +0.1%
• WTI and Brent rose 1.55% and 1% as Saudi Arabia cuts production and Nigeria suspended exports due to concerns of a leak.
• 10Y Bond Yields dropping lower: US 3.96%, Australia 4.01%, and Germany 2.46%.

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ASX 200 closed up 7 points to 7410 (-0.1%) in a narrow day of trading, boosted by a lower US inflation rate. Resources mixed after China’s manufacturing activity shrank for a fourth month this year. Iron ore miners slightly higher S32 up 0.8%, BHP up 0.5% and RIO up 0.4%. Energy continuing its bull run as Crude Oil has its best month in more than a year. STO up 0.3% and ALD up 1.2% Gold lower again as the USD climbs, NST -0.5% and SLR -20.2%. Banks mostly flat, with the Big Bank Basket up to $182.22 (-0.2%). MQG down 1%. REITS rose slightly. Tech mixed today, The All-Tech Index up 0.3%. SQ2 up 2%, and XRO up 0.1%. In corporate news, LYC gained 2.6% after record quarterly production of neodymium and praseodymium. ORG dropped 0.6% after reporting an 11% drop in revenue. SLR down 20.2% on reports of idling its Sugar zone mining and processing activities in 2024. Quiet on the economic front, the Melbourne Institute's Monthly Inflation Gauge indicated that prices accelerated to 0.8%, rebounding from June's 10-month low of a 0.1% rise. Asian markets gaining as China promises further measures to help out the economy and boost the property sector. Japan up 1.4%, HK up 1.2%, China up 0.3%. Australian bond yields mixed, 10Y yield up 0.4bps to 4.06% and 2Y yield down 0.7bps. Dow Jones futures down 31 points and Nasdaq futures down 20 points.

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The Dow Jones gained 177 points (+0.5%), ending the week on a win. At its best, the Dow was up by 283 points, while at its worst, it was up 72 points. The S&P 500 also saw an increase of 0.99%, while the NASDAQ rose 1.9% as US reporting season continued.

The USD Index slipped on price data showing moderation in annual US inflation. VIX was down 7.7%, and Gold bounced up 0.72%.

Roku surged 31.41%, beating market revenue expectations, Procter & Gamble rose 2.93% on upbeat results and outlook. Conversely, Exxon fell 1.2% on mixed results, and Ford fell 3.53% after pushing back its EV production goal to next year despite strong quarterly results.

HEADLINES

• ASX to rise, RBA policy meeting tops weekly agenda.
• Wall St Week Ahead-Hopes of 'Goldilocks' economy, rate peak buoy US stocks.
• Second-quarter U.S. earnings estimate still weak, but improving.
• August trading lull anticipated as US summer holidays heat up
• Banks vote to limit accounting of emissions in bond and stock sales.
• China hopes France can help take heat out of relations with EU.
• UK banks back in political crosshairs after Farage fiasco.
• White House cuts 2023 US deficit forecast after court blocks student loan forgiveness.
• Endgame for Fed's tightening cycle challenged by easing financial conditions.
• BOJ loosens grip on rates as prices rise, markets bet on bigger pivot.

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US stocks ended lower overnight, ending near worst levels as strong economic data showed the resilience of the economy, paving the way for the Fed to continue its tightening cycle. Dow down 237 points (-0.67%), snapping 13 straight sessions of gains dragged down by Microsoft -2.09% and Visa -1.12%. Dow at best up 125 points. Dow at worst down 304. Meanwhile, the S&P 500 fell 0.64%, and the NASDAQ lost 0.55%. US treasury yields jumped after news that the BoJ will allow long-term interest rates to rise, pushing the 10Y yield above 4% reducing the attractiveness of stocks, and the USD Index rose after the ECB hiked rates.

• ASX to fall. SPI Futures down 44 points (-0.53%).
• Gold fell 1.38% hitting a 2-week low as the USD climbs.
• Copper fell 0.59% as US economic data spurred the dollar higher.
• Nickel +0.3% Aluminium -0.47% Zinc -0.53%, Lead +0.79% Tin -1.32%
• WTI and Brent rose 1.47% and 0.96% surpassing the April peak on tighter supplies.
• 10Y Bond Yields: US 4.02%, Australia 4.03%, and Germany 2.49%.

European blue-chip equities rallied to their highest level in more than 15 years overnight despite the ECB rate hike as the market anticipates its close to the end of its tightening cycle. STOXX 50 +2.3%, FTSE +0.2%, CAC +2.1%, and DAX +1.7%. Asian markets mixed. Hang Seng +1.41% on track to enter a technical bull market. Meanwhile, greater China markets fell with Shanghai -0.2%, Shenzhen -0.41%, and ChiNext -0.32% as China’s industrial profits extended a double-digit drop on weak demand, with profits at industrial firms in Chain falling 16.8% YoY in 1H23.

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ASX 200 closed up 54 points to 7456 (+0.7%), a five-month high rebounding after an initial dip at the opening bell and now up 1.79% for the week. Tech stocks led the charge today bucking the trend and moving in tandem with the Nasdaq futures on Meta results. All-Tech Index up 2.1% and SQ2 rose 1.8% and XRO up 2.1%, Consumer discretionary enjoyed a boost, WES +1.6%, JBH +3.2% and ADH gained 10.7%. Miners in a hole, with the big trio BHP, RIO and FMG all in negative territory. Lithium no better AKE, LTR and PLS all down.  Coal stocks short-circuited, losing some of yesterday’s gains. WHC down 5.9%, NHC off 5.7% and YAL down 1.9%. The big four banks closed in the green all gaining over 1%, and the Big Bank Basket is up to $183.13 (+1.4%). Healthcare in the pink today, with CSL +1.8%, RMD +2.8% and RHC up 3.2%. REITS outperformed jumping 3.4%, as bond yields dip. SCG up 4.4% and VCX up 3.6%.In corporate news, FMG down 3.4% despite reaching the top end of guidance in the June quarter, MQG -4.4% on AGM comments, AKE -3.0% reported record revenue, MP1 surged 14.4% on hitting earnings guidance, SBM off 5.7% on upped production guidance, and KAR closed flat, on a 15% fall in oil production. On the economic front, Australia’s export prices shrank 8.5% in the June quarter, reversing from a 1.6% growth in the March quarter, and import prices fell by 0.8% quarter on quarter following a 4.2% drop in the March quarter. Asian markets are up, Japan up 0.5%, HK up 1.1%, hitting a five-week high, China stocks flat. Australian bond yields lower, 10Y yield and 2Y yield down 7bps. The Australian dollar rose 0.5% to 67.89c as the US dollar slides for the third straight session. Dow Jones futures up 3 points and Nasdaq futures up 107 points.

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US equity markets closed mixed following the Fed’s decision to raise rates by 25bps as investors assess the latest comments from Fed chair Powell. The Dow Jones seesawed but ended higher, up 82 points (+0.23%) for the 13th straight session, tying the record set in January 1987. Dow at best up 196 points. Dow at worst down 132 points. S&P 500 was flat, down 0.02%, and the NASDAQ fell 0.12%. US treasury yields slipped in choppy trading, and the dollar edged lower against major currencies, with the USD Index down 0.48%. The VIX volatility index (Wall Streets' fear gauge) fell almost 5%, down 4.8% to 13.19. Among stocks, Alphabet +5.77% on upbeat earnings, Microsoft -3.77% after laying out its spending plan to meet the demand for its new AI-powered services, and Snap sank 14.2% on weaker than expected Q3 forecast.

• ASX to open flat. SPI Futures down 1 point (-0.01%).

FOMC Meeting: The Federal Reserve has hiked rates by 25bp to 5.25-5.50%, as expected, following a unanimous vote by the FOMC. The economic growth characterisation shifted from "modest" to "moderate." Chair Powell emphasised a data-dependent approach, and while some positive disinflationary signals were noted, core CPI remains elevated. Market expectations on further rate hikes remain uncertain.

• Russell 2000 +0.72%
• Meta +1.3%, and shares are up 7.24% in after-hours trade following strong financial results for Q2, surpassing Wall Street expectations in advertising revenue (+12% in the quarter) and providing a positive outlook for the third quarter.  

European markets are broadly lower but off worst levels ahead of the ECB’s interest rate decision today. FTSE 100 -0.19% DAX -0.49% CAC40 -1.35% STOXX 600 -0.53%. The ECB is poised to raise its key rates by 25bps bringing the deposit rate to 3.75%. Lagarde already hinted at this move during the June meeting, effectively preannouncing it, which has reduced uncertainty surrounding this week's decision. Attention now shifts to the guidance provided for the period leading up to the next meeting in September. Asian markets mixed. China stocks retreat, indicating Beijing needs to act quickly on pledge Hang Seng -0.36%, Shanghai -0.26%, Shenzhen -0.47%, ChiNext -0.08%.

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