Market Updates

Global markets had a strong increase on Friday’s session. US markets had a strong performance, with the Dow rising by 701 points (+2.12%) and reaching a high of 743 points. The S&P 500 climbed +1.45%, securing its third consecutive weekly gain of 1.83%. The Nasdaq showed a rise of 1.07%, extending its streak of weekly gains to six, the longest since early 2020, with a total increase of 2.04%. These overnight gains were supported by positive labour market data, indicating moderate wage growth in May. This development suggests that the Federal Reserve may refrain from implementing a rate hike, shifting the language from "pause" to "skip" in order to emphasize that the rate hike cycle is not yet over. This decision allows the Fed the flexibility to assess the data as the impact of previous rate hikes gradually affects the economy.

The continuation of the US debt ceiling deal contributed to a positive market sentiment. US treasuries experienced a rise in value, while gold prices fell due to a strengthening US dollar. European markets also performed well, with the STOXX 50, FTSE, CAC, and DAX all showing gains of 1.6%, 1.6%, 1.9%, and 1.3% respectively. This positive market sentiment was supported by a decrease in eurozone inflation, providing reassurance to investors.SPI Futures up 76 points (+1.05%).

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ASX 200 rose 34 points to 7145 (0.5%) as resources rallied hard on better Chinese numbers and debt ceiling relief. AUD back in demand. For the week, the ASX 200 is down 9 points. Iron ore miners going hard. BHP up 2.8% and RIO up 2.5%, with FMG up only 1.7%. Lithium stocks are also in demand, led by PLS up 3.0% and IGO up 2.5%. Base metals better, S32 rallying 1.8% and gold miners also flying high, NCM up 4.6%. Oil and gas better ahead of the OPEC+ meeting this weekend.  WDS up 1.1%, and STO rose 1.4%. Coal a little merrier too, with WHC up 1.4%. Banks left behind with the Big Bank Basket down to $166.01 (0.1%) with NAB the worst hit down 1.0%. MQG slightly higher up 0.3% and insurers unchanged, and money managers slightly better. REITS firmed as GMG rose 0.4% and Industrials a little soft on wage rises, COL down 1.7% and WOW off 1.4%. Healthcare mixed, CSL off 0.7% and RMD up 1.0%. Tech doing well, APX a standout up 15.0% with WTC up 1.5% and the All Tech Index up 0.6%.

In corporate news, a slow day. New CFO for FMG and BUB in trouble, ADH cratered on business update down 15%.
On the economic front, lending numbers are down. Asian markets running hot following US deal. HK powering ahead by 3.9%. Dow Jones futures up 58 points and Nasdaq futures up 24 points.

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The ASX 200bounced back after sliding to a two-month low during trade closing up 20 points to 7111 (+0.3%), as sentiment improved after the House of Representatives passed the bill to raise the debt ceiling with bipartisan support. Resources and base metals clawing back gains from yesterday’s losses, BHP +0.1%, RIO +0.4% and FMG up 0.8%. Lithium mixed, but mostly down MIN down 3.6% and PLS down 1.6%. Gold miners are today’s winners as the likelihood of another Fed rate hike increases. NST 3.1%, NCM 2.4%, EVN 0.6%. Financials showing modest gains, with the Big Bank Basket down to $166.17 (-0.1%), CBA, flat WBC off 0.4% and NAB up 0.3%. Tech stocks didn’t stay down for long, with the All-Tech Index up 0.7%, SQ2 +2.3% XRO +1.9% and WTC +0.9%. Industrials were mixed and uninspiring, ALL rose 1.3%, SEK up 0.6% and REA off 2.0%. Defensives did ok with WOW and COL up. Energy sector up 0.4%, despite oil dropping for a third consecutive session.

In corporate news, NMT jumped 21.9% after providing an update on its joint venture for lithium-ion battery recycling. LGL rose 16.1% after raising full-year guidance. AGY dropped 6.3% despite announcing that the Rincon Lithium project is now partially operational.

In economic news, Australian retail sales were unchanged at $35.3bn in April, indicating that retail has hit a plateau. Caixin China’s general manufacturing PMI unexpectedly rose to 50.9 in May from 49.5 in the previous month, while exceeding consensus, the latest results highlights the patchy economic recovery amid insufficient demand and deflation risks. Asian markets are up, Japan’s Nikkei rises on bargain hunters up 0.9% and HK up 0.6% with China up 0.3%. Australia 10Y yield up 3.62%. Dow Jones futures down 21 points and Nasdaq futures down 11 points.

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ASX 200 closed down 118 points to 7091 (-1.6%), plunging at 11:30 on the CPI release, which came in hotter than expected, and Chinese PMI numbers which continue to show an economy that has peaked and slowed. Energy the worst-performing sector today; markets remain divided and uncertain on whether OPEC+ will cut production at the upcoming meeting, with WDS down 2.3%, STO down 2.7%, and BPT sliding 2.5%. Resources and base metals no better as oil comes under pressure following the weaker-than-expected data from China, BHP -3.4%, RIO -2.1% and FMG down 3.0%. Gold miners are in positive territory today on safe-haven buying, NST +1.7% and AGG gaining 2.7%. Financials weighed, with the Big Bank Basket down to $166.35 (-2.3%), BOQ took a beating down 5.4% after accepting an enforceable undertaking from both AUSTRAC and APRA, while the big four banks are all down over 2%. REITS falling in tandem with bond yields. Interest rate-sensitive tech stumbled lower, with the All-Tech Index falling 0.5%, SQ2 -1.8%, NXT -1.0% and CPU off 1.3%. Industrials were broadly down, and Healthcare eased, RMD down 2.3% and RHC off 1.7%.

In corporate news, QAN continues to fly, up 0.9% as the market continues to digest an upbeat investor day. SLR -1.9% provided St Barbara with a revised non-binding indicative offer, and 360 +1.0% on positive Q1 results at their AGM.

In economic news, Australian inflation rose to 6.8% YoY in April up from 6.3% in March, significantly exceeding expectations of 6.4%. China’s PMI showed further deterioration in manufacturing activity, coming in at 48.8 below the consensus of 49.5 and 49.2 the previous month, commodity prices coming under pressure. Asian markets down, Japan down 1.3% and HK off 2.4% with China sliding 0.6%. Australia 10Y yield down to 3.59%. Bitcoin set for first monthly drop in 2023 down 1.66%. Dow Jones futures down 121 points and Nasdaq futures down 44 points.

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US markets finished mixed overnight. Dow down 0.15%. Dow at best up 39 points, at worst down 199 points. S&P 500 flat up 0.01%, and the NASDAQ extends its gains up 0.32% driven by a rally in semi-space, with Nvidia rallying a further 2.99%. S&P 500 and Nasdaq nearing their highest levels since August 2022 and are on track to post a monthly gain. Worries over the debt ceiling continue to weigh on markets. Long-dated treasury yields dropped while the dollar fell after reaching a two-month high. Telsa shares see a boost +4.14% after Musk’s visit to China, and was quoted he was “open to expanding in China”. European stocks are broadly down, Stoxx 50 -0.7% FTSE -1.4% CAC -1.3%, and DAX -0.3%, while the Stoxx 600 closed down 0.9% on track for its steepest monthly fall this year, despite hitting a year high earlier this month.  SPI futures down 34 points (-0.47%).

Nvidia briefly joined the US$1 trillion value club before closing 3% higher, just under the US$1 trillion valuation mark. Nvidia has now tripled its value in less than eight months, the latest surge driven by the company’s forecast and its forward P/E ratio of 47.3. Analysts see Nvidia as a crucial company in a rapidly changing era focused on AI capabilities. “During a gold rush, sell shovels”.

HEADLINES

• Top US Republican McCarthy urges support for debt ceiling deal ahead of key vote.
• Nvidia briefly joins $1 trillion valuation club.
• HP misses revenue estimates as inflation saps PC demand.
• Elon Musk kicks off China visit, Tesla expansion in focus.
• Stocks close mixed, Nvidia's rise offsets debt ceiling jitters.
• US consumer confidence dips to six-month low, labor market views soften.
• Ukrainian drones strike Moscow and Kyiv, tensions escalate.
• Deepfakes emerge in US politics, AI concerns raised.
• Chinese jet carries out aggressive maneuver near US military plane.
• NATO to deploy more troops to Kosovo to curb violence.
• ECB warns of impact on top European banks if funds run into trouble.
• Pfizer's hemophilia therapy shows positive results in late-stage study.
• OPEC+ cuts oil output to stabilise prices.

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ASX 200 closed down 8 to 7209 (-0.1%) in a subdued trading day. ASX 200 high of 7227, low at 7204. Namibia's threat to take minority stakes natural resources, including uranium, led to a sharp sell-off of PDN falling 19.6%, DYL down 5.7%, and BMN slid 5.9%. The Big Bank Basket lost its grip on yesterday's gains, down to $170.22 (-0.5%), banks down across the board, ANZ taking the biggest hit down 1.4%, followed by CBA -0.4%, NAB -0.2% and WBC -0.2%. Coal stocks eased back. Base metals and iron ore miners edged higher, BHP rose 0.3% and RIO up 0.2%. Energy stocks found no support from stronger oil prices, WDS down 0.4%, STO down 0.4% and STX off 3.2%. Gold stocks are broadly up, NST +0.6%, DEG +0.4% and WAF +0.6%. Tech flat, All-Tech Index up 0.3%, CPU +1.1%, WTC +0.5%, and WBT +7.4%. REITS fell in late afternoon trade, VCX -1.6%, CHC -2.2% and SCG off 1.4%. Lithium stocks closed mixed, MIN +1.4%, LTR +1.1%, while SYA plummeted +11.9% after completing a $200m bookbuild placement. TLS managed a 0.7% gain, and other defensives better WOW up 0.1% and RHC up 1.1%. In corporate news, QAN +2.7% on EBIT guidance, small-cap PFT surged +20% after announcing expectations for revenue to grow 50%, and CGF +2.6% following investor day. In the land of economic woes, Australian building permits nosedived, falling 8.1% MoM, significantly below consensus for a 2% rise – an unfortunate blow for renters. ANZ-Roy Morgan consumer confidence fell 1.1pts to 76.2, marking thirteen straight weeks below the 80 mark. The main driver for the decline is the reduced confidence in personal financial situations compared to a year ago. Asian markets are down, Japan down 0.1% and HK off 0.2% with China slipping 0.6%. Australia 10Y yield down to 3.69%. Dow Jones futures up 59 points and Nasdaq futures up 72 points.


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The US markets and London were closed overnight for Memorial Day holiday and Spring Bank Holiday. The US debt ceiling deal is now facing potential challenges as some members of the Republican party have expressed opposition to raising the US debt ceiling, which currently stands at $31.4 trillion, dampening optimism. Despite this, US equity futures showed modest gains, with cautious optimism prevailing that a default will be avoided.

In European markets, there was a general decline, primarily driven by the underperformance of tech and bank stocks. The STOXX 600 Index dipped by 0.1% after experiencing its strongest one-day gain in nearly two months on Friday.

Nvidia made an announcement on Monday regarding its plans to construct Israel's most powerful AI computer. This decision is in response to the increasing customer demand for AI applications. The new system is anticipated to become one of the fastest supercomputers worldwide.

HEADLINES

• European stocks slip as tech and banks drag.
• PwC Australia puts nine partners on leave, overhauls board amid tax leak scandal.
• Republicans speak out against US debt-ceiling deal.
• Biden says final US debt ceiling deal ready to move to Congress for vote.
• North Korea says it will launch its first military spy satellite in June.
• China rejects US request for a meeting between defense chiefs.
• Cathay Pacific nears Boeing 777-8F freighter order.
• GM Secures Financial Support for an EV Battery Plant in Quebec.

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ASX 200closed up 63 points to 7217 (+0.9%), rising a second straight session in a broad market rally on positive news that a tentative deal to raise the debt ceiling was reached over the weekend. Mining stocks were firm today, leading the market higher with solid gains in BHP, RIO and FMG, all up over 1% following a rise in iron ore prices late last week. Financials put on their money-making boots, with the Big Bank Basket up to $171.04 (+1.3%), with CBA leading the charge up 1.4%, while NAB, WBC, and ANZ followed closely up 1.3%, 1.2%, and 1.2%. REITS took centre stage as the best-performing sector, up 2.0%, GMG +1.8%, CHC +3.4% and MGR +2.2%. Consumer discretionary sector in the red today, as retailers took a hit MYR -1.4% and JBH -0.2%. Energy stocks were good, supported by stronger oil prices, WDS +1.0%, STO +0.9% and BPT up 1.1%. Lithium stocks stood out, with MIN up 2.3%, AKE up 1.4% and LTR up 1.5%. Gold sector was mostly flat, but EVN and SSR pumped the breaks falling 1.7% and 1.9%, respectively.
Tech a little flat considering, All Tech Index up 0.1%, SQ2 and NXT found support up 1.2% and 2.7%, while XRO slipped 0.9%. In corporate news, APX +10.6% on broker rating changes, LLL up 17.2% on securing $106m through a strategic placement, HUM climbed 7.7% after ASIC revokes BNPL stop order, and SHV gained 8.7% on results despite posting a net loss of $96.2m.
In economic news, WTI crude futures climbed over $73 a barrel, extending gains from the previous session on positive sentiment on the US debt ceiling deal. NZ dollar remains depressed, trading near six-week lows following last week's 25bps hike. Asian markets mixed, Japan up 0.7% hit a new 33-year high above 31,400 during trade, HK down 0.7% with China up 0.2%. Australia 10Y yield down to 3.7%. Dow Jones futures up 64 points and Nasdaq futures up 75 points.

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The ASX 200 is anticipated to rally today on debt ceiling relief, rebounding from a 125-point (-1.71%) fall last week. All three major US indices gained +1% last week, with the Nasdaq leading the way, gaining 2.51% fuelled by AI hype, supported by favourable forecasts from Nvidia. This week, the trading week in the US will be shorter due to the Memorial Day Holiday on Monday. US jobs data out this week, non-farm payrolls and unemployment data on Friday, both of which are pivotal indicators used by the Fed to make decisions regarding interest rates.

TODAY'S HEADLINES

• ASX poised for debt ceiling relief rally.
• McCarthy, Biden predict Congress will pass debt ceiling deal.
• Russia unleashes largest drone attack on Ukrainian capital ahead of Kyiv Day.
• Texas Senate to deliberate on impeached AG Ken Paxton.
• Oman's Sultan in Iran for talks on diplomatic, security issues.
• China's home-grown C919 completes first commercial flight.
• ISS backs Toyota shareholder proposal on climate disclosure.

Catch up on all the latest with Henry Jennings on today’s Pre-Market Podcast.

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