Market Updates

The ASX 200 up 40 points to 7118 (+0.6%) snapping back from a 4-day losing streak ahead of CPI numbers tomorrow. REITS saw the biggest gains today as the NSW premier announced an increase in height restrictions for apartment building in Sydney. GMG up 1.2% and SCG up 4%. Banks gained after their recent drop The Big Bank Basket up $168.31 (+0.8%). CBA +0.5%, WBC +1.6%, ANZ up 1.5% and MQG +0.8%. Money managers firm and insurers mixed as MPL drops 3.9%. Resources rose in a broad market rally, Iron ore miners faring well, BHP up 1.5%, RIO up 1.7% and FMG up 2.9% despite broker downgrades. Gold closed mostly flat as fears in Russia caused a rush for safe-haven assets early in the day, before dropping off. NCM up 2% and NST down 0.7%. Lithium mixed with LRS dropping 3.9% following last week’s rapid gain.  Oil and Gas stocks fairly flat, WDS up 0.6% and BLU up 4.6%. The All-Tech Index dropping 0.7% ahead of CPI numbers tomorrow morning, despite a forecasted decrease in inflation rates. WTC down 0.9% and TNE down 0.1%. In corporate news, CKF rose 17.7% following an increase in sales, yet also noted inflation is placing pressure on underlying margins. MPL dropped 3.9% following APRA’s decision ruling that they must increase their capital holdings following their data breach late last year. PBH has been placed in a trading halt pending an announcement regarding the US division sale. On the economic front, ANZ Roy Morgan Consumer Confidence had a slight increase but still remains well below the average, for the 17th consecutive month. Asian markets are trading mostly higher China up 1.2% HK up 1.9% and Japan down 0.3% on Chinese Premier's comments at WEF.. Bond yields mostly unchanged, 10-year steady at 3.95%. Dow futures up 87 points. NASDAQ futures up 46.

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Wall Street lost ground overnight, ending near worst levels as worries about the impact of further interest rate hikes mounted and crude prices advanced over aborted Russian mutiny over the weekend. Tech and mega-cap stocks led the losses as traders unwound bets that the Fed will cut interest rates this year, NASDAQ down 1.16%, and the S&P 500 fell by 0.45%, while the Dow Jones edged marginally lower, down 13 points (-0.04%). Dow at best up 91 points. Dow at worst down 117 points. VIX Volatility Index up 6%.  Among stocks, Alphabet (GGOGL.O) down 3.19% after UBS downgraded the stock to neutral, while Tesla (TSLA.O) fell 6.06% after Goldman Sachs downgraded its rating to neutral. On the positive side, US regional bank PacWest (PACW.O) jumped 4.01% after private equity firm Ares Management said it had acquired a US$3.5bn specialty finance loan portfolio from the lender. US 2Y and 10Y treasury yields inverted further to 102bps, only 8bps away from the historic inversion of 110bps after the US regional bank shock in March. The probability of a rate hike at the next FOMC meeting is currently at 74.4%.  

• Australian market to open up. SPI futures up 20 points (+0.28%).
• Gold finished 0.1%, climbing from a 3-month low as safe-haven assets become more attractive in the wake of Russian turmoil.
• Copper climbed 1.3% as all other base metal prices dropped on a worsening economic outlook and a decrease in German business moral.
• Nickel -4.7% Aluminium -1.19% Zinc -1.31%, Lead -2.56%, Tin -3.73%.
• WTI Crude rose 0.26% and Brent gained 0.74% on concerns of supply issues from Russia.
• 10-year yield: US 3.72%, Australia 3.91%, and Germany 2.3%.

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The ASX 200 started the week down 21 points to 7079 (-0.3%), hitting 7,054, its lowest level in three months weighed down by losses in banking and mining stocks. Oil and gas stocks mixed despite strength in the oil price, KAR -0.5% and STX -1.1%, while BPT edged higher, up 0.4%. Iron ore giants BHP, RIO and FMG all fell 0.3% each. Gold miners rallied on bullion’s strength and a weaker US dollar. NCM +1.2%, NST +2.0%, and EVN +1.5%. Tech stocks mixed, XRO +1.7% CPU -1.3%, while WTC gained 0.6%. All-Tech Index up 0.1%. All banks closed in the red. NAB the worst performer of the big four, down 0.8%. Big Bank Basket fell to $166.95 (-0.5%). REITS better as bond yields fell. SCG up 1.0%, and VCX up 0.3%. Travel stocks continue their decline as oil prices rose QAN down 2.3%, and AQZ off 1.8%. In corporate news, CTD -0.8% awarded a four-year travel management contract with the federal government, VNT +1.4% secured a five-year maintenance contract with the Department of Defence, APX tumbled 12.3% after CFO Helen Johnson resigned abruptly, MTS +4.7% on good results, LRK fell 16.3% on downgraded sales forecast, and E25 jumped 5.0% after they secured a manganese sulphate supply deal with General Motors. Nothing significant on the economic front. Asian markets down, Japan down 0.2%, HK off 0.3%, and China down 1.4% hitting its lowest levels in over five months. Australian bond yields down, 10Y yield down 4bps to 3.95%, and 2Y yield down 7bps to 4.12%. Bitcoin down 0.63%. Dow Jones futures up 44 points and Nasdaq futures up 19 points.

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The main event this week is Australia’s monthly CPI data out Wednesday. The last reading of 6.8% in April surprised the market, up from 6.3% in March, which was the lowest reading in 10 months, significantly exceeding market expectations of 6.4%, which led to a 25bps rate hike by the RBA in June. May CPI consensus at 6.1%. Also, on the domestic front, retail sales data out Thursday and housing permit data out Friday will provide some insight into the broader economy and the health of the housing market. Powell speech Thursday and Eurozone CPI data Friday.

Australian market to open lower. SPI futures down 16 points (-0.23%) to 7043 over the weekend.

Last week: The ASX 200 fell 150 points (-2.1%). Defensive stocks did well, CSL +1.49% recovering from its recent sell-off from the company’s profit warning, WOW +3.21%, RMD +1.58%, and TWE +0.35%. Travel stocks were hammered QAN -6.77%, FLT -12.35%, CTD -9.65% and WEB -5.96%. Tech sector also down with XRO falling -4.6%. Gold fell, and the energy sector was lower following the decline in oil prices.

Global equities last week: US markets snap six-week winning streak. Dow Jones down 572 points (-1.67%), S&P 500 down 1.4%, and the NASDAQ down 1.44% as recession fears remerge triggered by tight monetary policy and pressuring crude oil prices. European markets were also down, with the STOXX 600 off 2.93%, FTSE -2.37%, and DAX -3.23%, respectively.

• Gold finished 0.41% higher, weighed by hawkish comments from the fed.
• Copper fell 3.64% as hawkish fed comments and a stronger USD sent prices down.
• Nickel +0.22% Aluminium -2.11% Zinc -2.07%, Lead -2.07%, Tin -2.44%.
• WTI Crude fell 0.45% and Brent fell 0.44% on concerns of global economic growth.
• 10-year yield: US 3.74%, Australia 3.94%, and Germany 2.37%.

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ASX 200 finished down 96 points at 7100 (-1.3%) with another day of losses, the third in a row. 2.1% for the week. Once again, no real reason apart from Powell and the lack of Chinese stimulus perhaps, 10bps not really cutting it. Banks did a substantial nosedive with the Big Bank Basket dropping to $167.86 (-1.6%). CBA fell 1.6% and ANZ off 2.1%. MQG also falling hard with insurers in the red too. Industrials fared slightly better in the bloodbath, WOW and COL kept their heads above water, TLS only fell 0.5%, and BXB and other industrials managed small (ish) losses. Healthcare was mixed with CSL unchanged with SHL down 1.0%. REITs under pressure GMG down 2.6% and SGP off 2.2%. Tech eased with the All-Tech Index down 1.1% as WTC fell 0.1% and XRO dropped 1.8%. Resources held up relatively ok, BHP down 1.2% and RIO off 1.1% with lithium stocks mildly weaker but some bright spots there. Gold miners fell as bullion dropped, NST down 2.5% and DEG off 3.8%. Oil and gas though was smacked hard, as crude continued to head lower in Asian trade, WDS off 4.6% and STO down 4.3%. In corporate news, COH fell 3.5% on issues with an acquisition in the UK, DLI soared 30.1% on some ‘stunning ‘drill results. Nothing on the economic front today. Asian markets are weaker with China back trading after Dragon Boat Festival. Dow futures down 136 points. NASDAQ futures down 68 points.

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Low-volume night in the US dominated by Powell’s testimony (see below) which was seen as a little less hawkish. The Fed remain data dependent (seen as a positive). Tech stocks led with the NASDAQ up 1.18% and the other markets flat. The Bank of England raised rates by 50bp, more than expected, although the UK market (FTSE) only fell 0.76%. The odds of a Fed rate rise at the next meeting on July 26 rose from 74.4% to 76.9%. Weekly jobless numbers hit a 20 month high and the Leading Economic Index fell for the 14th time on the trot. The energy sector was the worst-performing sector on the back of a 4% fall in the oil price.

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

European markets are down for a third consecutive session. STOXX 50 -0.42%, FTSE -0.76%, CAC -0.79%, and DAX -0.22%. The BoE likely dampening sentiment as they raise rates to a 15-year high. 

• Gold finished 0.97% lower, hitting a 3-month low as Powell's testimony wrapped up.
• Copper rose 0.13% as Inventories in LME Warehouses hit the lowest level since October 2021
• Nickel -0.2% Aluminium -0.4% Zinc -0.17%, Lead +0.23%, Tin -0.42%.
• WTI Crude fell 4.66% and Brent fell 3.64% on fears interest rates will continue to climb, reducing demand for Crude.
• 10-year yield: US 3.79%, Australia 4.01%, and Germany 2.49%.

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ASX 200 took an ugly turn today falling 119 points to 7196 (-1.6%). No real reason, slight weak lead from US, no Asian session. US futures eased slightly but stop losses and maybe Powell’s testimony kicked us lower. Losses across all sectors, Banks under serious pressure, NAB down 1.4% and CBA off 1.6% with the Big Bank Basket down to $170.57 (-1.5%). MQG toppling 2.7% with insurers also in trouble. QBE down 1.3% and the fund managers sloppy, MFG giving back some recent gains falling 6.2%. Industrials in trouble too, consumer stocks eased back, WOW and COL down around 1.2%, WES a similar amount with retail stocks falling, JBH down 1.7% and APE off 1.5% %. Travel stocks taking a plunge, FLT down 3.8% and WEB off 3.0%. Healthcare slumped into ICU led by CSL off 0.6% and COH down 1.7%. REITs in trouble, GMG off 1.5% and SGP down 3.3%. Tech in the seller’s sights too WTC off 4.0% and XRO minus 4.4%. The All-Tech Index fell 3.0%. Resources were sold off aggressively with BHP down 2.4% and FMG falling 2.2%. Gold miners fell, NCM down 1.3% and oil and gas lost ground. Coal stocks drifted lower. Lithium plays were mixed with winners and losers. In corporate news, DEG fell 1.8% as it bought into a neighbouring project, GOR fell 8.3% on production issues, JLG dropped 11.9% on a business update and ERD jumped 60.3% on a NBIO. Nothing on the economic front, although Treasurer Jim Chalmers said the new RBA governor would be named in July. Did not rule Lowe out. Asian markets quiet with China and HK closed. Much fuss about Biden’s dictator comments though. Japan eased. 10-year yields steady at 3.97%. Dow futures down 49 points. NASDAQ futures down 47 points. And continuing under pressure ahead of BoE.

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US equities fell overnight as Fed chair Powell reinforced the banks objective to rein in inflation, pointing to more rate hikes. All three major indices clocked their third straight daily loss, closing off best levels after a stalled afternoon rally attempt. Dow Jones down 102 points (-0.3%). Dow at best up 44 points. Dow at worst down 178 points. S&P 500 down 0.52%, and NASDAQ down 1.21% driven by weakness in tech as future rate hikes spooked the market and enthusiasm around AI. VIX was strangely placid, down 4.9% its lowest reading since January 2020. Telsa -5.73% after Barclays downgraded its rating to equal weight from overweight, saying the recent rally was too sharp relative to fundamentals, Microsoft -1.33% and Google -2.09% were the heaviest drags. US treasuries initially rose on hawkish tone but finished flat, and the USD Index fell 0.46% to 102.09. ASX to slip, SPI Futures down 10 points (-0.14%).

European markets mostly down, weighed down by real estate stocks on rate hike jitters, STOXX 50 -0.5%, FTSE -0.1%, CAC -0.5%, and DAX -0.6%. UK CPI reading defied expectations (8.4%) and held at 8.7%, putting more pressure on BoE a day before it is expected to raise rates for the 13th time in a row. Markets now pricing in a 40% chance for a 50bps hike on Thursday, and nearly a 100% chance rates will reach 6% by December vs current 4.5%.

• Gold finished 0.19% lower overnight after hitting a three-month low on Powell's remarks.
• Copper gained 0.64% as the dollar weakened. Optimism over Chinese demand for copper fades.
• Nickel -3.45% Aluminium -0.04% Zinc +2.33%, Lead +1.07%, Tin +2.45%.
• 10-year yield: US 3.72%, Australia 3.93%, and Germany 2.40%.

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ASX 200 closed down 43 points to 7315 (-0.6%), easing after seven days of gains as commodity stocks lost traction on Chinese demand concerns. Gold stocks led today, falling 1.9%. NST down 2.3%, and NCM off 1.2%. Miners followed closely as iron ore prices fell. BHP lost 1.1%, RIO down 1.4%, and FMG off 1.7%. Lithium stocks mixed, MIN -1.1%, PLS +2.2%, and AKE +1.3%. Healthcare stocks healthier, with MSB +5.8% and TLX up 6.0%. Insurers are also good. QBE, IAG, and SUN all hit 52-week highs as the market bets their asset base will benefit from higher yields as rates rise. Tech rallied in the morning before a sell-off at lunchtime. All-Tech Index down 0.4%. XRO hit a new 52-week high in the morning, reaching $121.29, before closing down 1.1%. Banks mixed, CBA +0.1%, NAB +0.1%, ANZ -0.5% and WBC -1.0%.The Big Bank Basket slipped to $173.11 (-0.1%). Elsewhere, WES down 1.6%, GMG off 1.3%, and JBH off 2.4% as money found a way back into staples. In corporate news, the ACCC blocked a network-sharing agreement between TLS and TPG. TPG fell as low as 10.8% before stabilising in the afternoon and closing down 5.4%. SUL down 2.6% after UBS downgraded the stock. LKE up 4.9% as bargain hunters stepped in, following a 41% fall in the previous two sessions. DXS up 1.1% despite announcing a ~$1bn loss in asset revaluation. SYA announced positive preliminary lithium study results in Canada. In economic news, the Westpac-Melbourne Institute Leading Economic index was flat from the previous month in May. Asian markets mixed, Japan’s Nikkei rises on dip buying, up 0.5%, HK falling for a third straight session tracking US-listed Chinese stocks, down 1.9%, and China off 0.6%. Australian bond yields ease 2Y yield down 7bps to 4.1%, and 10Y yield down 7bps to 3.98%. Bitcoin up 1.69%, YTD +74.62%. Dow Jones futures down 27 points, and Nasdaq futures down 18 points.

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ASX 200 closed up 63 to 7358 (+0.9%), rising for its seventh consecutive session, supported by interest rate cuts out of China propping up commodities as well as positive RBA meeting minutes that revealed policymakers were less hawkish on more rate hikes than previously thought. Energy and mining stocks led the advance today, WDS rose 2.2%, STO up 2.3%, BHP +1.3%, and PLS +2.5%. REITS did well, up 1.3%, buoyed by a less hawkish RBA, SCG up 1.5%, GMG up 1.0% and VCX gaining 1.6%. Banks stronger, with the Big Bank Basket up to $173.35 rising 1.2%. NAB leading the charge up 1.7%. WBC also in demand up 1.3% with insurers doing ok, QBE up 1.6% and SUN better by 1.6%. Tech rode the broad market rally. All-Tech Index up 0.3%, CPU up 0.7% and XRO rose 1.4%. Defensive sectors outperformed. Healthcare stocks were mixed, CSL off 0.3% and RMD up 0.4%. Industrials were strong today, WOW up 1.0%, and ALL up 1.6%. Lots on the corporate front today, BST -0.3% reported an 11.7% fall in sales and significantly reduced NPAT guidance for H2 FY23, ASX +1.0% on management restructure, LLL +4.2% upgraded resource estimates by 48.2%, WDS +2.2% invests in Trion oil project in Mexico, LRS announced a 241% increase in resource estimate for the Colina Deposit, and ZIP -1.1% gained approval from convertible note holders to amend terms allowing the company to reduce its debt by $192m. In economic news, the PBoC slashed two key lending rates for the first time since August 2022 in line with expectations. One-year LPR lowered 10bps. Asian markets are down, Japan down 0.3%, HK down 1.7%, and China off 0.2%. Long-dated bond yields rise while the 2Y yield fell, Australian 10Y yield up to 4.01%. Bitcoin up 0.62%. Dow Jones futures down 141 points, and Nasdaq futures down 41 points.

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