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17 June Markets at a glance

ASX remains subdued, energy stocks near seven-month low, gold rises tracking strong bullion prices, and financials struggle ahead of RBA rate decision.

Around the grounds

  • ASX drifts lower
  • Energy slides to seven-month low
  • Financials struggle for direction ahead of RBA
  • AU & China sign MOUs on economy, trade & education

The S&P/ASX200 is trading in a narrow range to start the week, as traders turn to caution ahead of the RBA’s interest rate decision tomorrow. The central bank is all but certain to keep rates on hold at 4.35%. Futures see a 72% likelihood that the first rate cut from the RBA is unlikely until December.

Mining stocks are lower, tracking weakness in iron ore and copper prices. Energy players are also under pressure, with the sub-index slumping to its lowest level since December 2023 as the price of oil slides. The index is on track for its third consecutive session of losses and is down over 7% this year as of last close.

Gold is a bright spot, with stocks clocking their first weekly gain in four last week amid signs of slowing US inflation which raised hopes of a rate cut later this year. The broader sub-index is down nearly 1% so far this year as of last close.

On the economic outlook, ANZ-job ads fell 2.1% in May, down for a fourth straight month, signalling a continued moderation in the labour market as interest rates remain high and the economy is sluggish.

While ads were down over 18% from the same month a year ago, they remain 20% higher than pre-pandemic levels.

In the political arena, Australia and China have signed five memorandums of understanding around trade, climate change and the economy, during a state visit by Chinese Premier Li Qiang to Canberra.

It comes as both countries look to bring bilateral relations “back on track” after a number of restrictions were imposed on Australian agricultural and mineral exports in 2020 during a diplomatic dispute.

Li is the first Chinese Premier to visit Australia in seven years.

In the news

Australian listed shares of Tabcorp (TAH) are lower, after the company named former Australian Football League (AFL) boss Gillon McLachlan as its new CEO and Managing Director.

Mr McLachlan will join the company on August 5th upon regulatory approval and will receive an annual fixed remuneration of AU$1.5 million.

Tapcorp’s former CEO Adam Rytenskild stepped down in March after allegedly using offensive language in the workplace.

On the flip side, shares of Capitol Health (CAJ) have surged, posting their biggest intraday percentage gain since June 2017 as the company receives a AU$272 million takeover bid from medical imaging services firm Integral Diagnostics (IDX).

Under the proposal, Capitol shareholders would receive 0.12849 Integral shares per Capitol shares and values Capitol at an enterprise value of AU$413 million.

Going global

Around the region, Asian shares are mostly lower after mixed Chinese data threw cold water on the tiger economy’s recovery.

Breaking it down, retail sales topped forecasts in May, but industrial output and fixed asset investment both fell short of expectations, while home prices fell at their fastest pace in nearly a decade, as the property sector struggles to find a bottom despite government efforts to rein in oversupply.

The PBOC meantime kept its one-year rate unchanged, amid some speculation of a cut following surprising soft bank lending data. However, the country’s official Financial News reported there was still room to lower rates.

Japan’s Nikkei 225 is on watch, breaking below the psychology level of 38,000 for the first time this month, as a risk-off mood takes hold of investors over worries about US and domestic economic growth.

Futures in the US are relatively flat, though the Nasdaq has edged higher set to continue its run of record finishes.

Turning to currencies, the Euro remains on defensive footing holding near one-month lows on continued concerns about the political outlook in Europe. Sterling is flat, as the yen struggles to find direction after the BOJ surprised markets last week, keeping its bond buying unchanged and pushed details of its tapering plan out to its policy meeting in July.  

The US dollar index was little changed but remains near its May high. 

All prices and analysis at 17 June 2024.  The content is distributed by WealthHub Securities Limited (WSL) (ABN 83 089 718 249)(AFSL No. 230704). WSL is a Market Participant under the ASIC Market Integrity Rules and a wholly owned subsidiary of National Australia Bank Limited (ABN 12 004 044 937)(AFSL No. 230686) (NAB). NAB doesn’t guarantee its subsidiaries’ obligations or performance, or the products or services its subsidiaries offer.  This material is intended to provide general advice only. It has been prepared without having regard to or taking into account any particular investor’s objectives, financial situation and/or needs. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice.  Past performance is not a reliable indicator of future performance.  Any comments, suggestions or views presented do not reflect the views of WSL and/or NAB.  Subject to any terms implied by law and which cannot be excluded, neither WSL nor NAB shall be liable for any errors, omissions, defects or misrepresentations in the information or general advice including any third party sourced data (including by reasons of negligence, negligent misstatement or otherwise) or for any loss or damage (whether direct or indirect) suffered by persons who use or rely on the general advice or information. If any law prohibits the exclusion of such liability, WSL and NAB limit its liability to the re-supply of the information, provided that such limitation is permitted by law and is fair and reasonable. For more information, please click here.


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