6 June Markets at a glance
Around the grounds:
- ASX higher as financials gain on easing rate-hike fears
- AUD marches higher as the BoC cuts rates. NZD climbs to three-month high
- Australia trade surplus rebounds April
- Euro steady ahead of ECB decision
The S&P/ASX200 is in positive territory to touch a nine-session high as financials drive gains in a broad-based rally. It comes after economic growth data yesterday eased fears the Reserve Bank of Australia (RBA) would hike interest rates. Market participants however do not see a cut from the RBA as imminent with futures not pricing in a cut to 4.10% until May next year.
The rate-sensitive banks are all higher, nearing a three-month peak, and marks the fifth straight session of gains. Miners are also up, recovering from a two-day slide. A similar story for gold and energy plays, as underlying commodity prices rebounded after fresh U.S. data boosted risk appetite.
In forex, the Australian dollar (AUD) is seeing some buying after the Bank of Canada cut its official interest rate signalling what could be the start of a potential easing cycle for global central banks.
The Canadian central bank is the first of the G7 to ease interest rates, and opens the door to more reductions, with the ECB the next cab off the rank tonight.
In the news
Australian listed shares of IDP Education (IEL) have taken a hit, touching their lowest level since August 2020 after the company forecasted a 15-20% drop in IELTS volumes in fiscal 2024 amid a more restrictive policy environment in key destination countries which it says is reducing the size of the international student market.
On the flipside, shares of Magellan Financial (MFG) have jumped as the company reports total funds under management (FUM) grew to AU$36.7 billion as at the end of May, compared to AU$36.3 billion at the end of April.
Finally, New Zealand listed shares of SkyCity Entertainment (SKC) have plunged, at one stage touching the lowest level since March 2020 after the casino operator took the scissors to its annual profit forecasts and suspends dividends until fiscal 2026 due to what it calls tough operating conditions amid a potential uptick in costs.
Going global
On the global stage, stocks across the Asian region are stronger as those rate cut bets strengthen. MSCI’s broadest index of Asia-Pacific shares outside Japan is up over 1% led by tech stocks, with the index on track for a near 3% gain in the week and snap its two-week losing streak.
Indian stocks are set for a muted start, continuing a choppy week after Prime Minister Narendra Modi was formally named to lead for a third straight term.
Focus for investors however remains on the interest rate outlook, with the EUR firm ahead of that key rate decision from the ECB where markets see a rate cut all but certain.
The US dollar is lower on renewed bets the FOMC will also begin its easing cycle this year. Futures see a near 50 basis point rate cut in 2024, with the first expected in September. Friday’s nonfarm payroll report is the next data set on the watchlist, with economists expecting 185,000 jobs to be created in May.
Elsewhere, Nvidia shares (NASDAQ: NVDA) will remain in the spotlight when US markets re-open after the AI tech titan overtook Apple (NASDAQ: AAPL) as the second most valuable company, breaching the US$3 trillion mark.
The chipmaker is preparing to split its stock ten-for-one on June 7, a move that some in the market say could increase its appeal to investors even further.
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