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5 July Markets at a glance

ASX lags as miners and financials weigh. Stock specific, Santos is in focus as Saudi Aramco says it’s not in the running for the Australian gas producer, shares set for best week since early May. Bigger picture, mining stocks are set for the best week since mid-September. And in forex the AUD is standing tall at a six-month peak.

Around the grounds

  • ASX slips to end the week
  • AUD stands tall at six-month high
  • AXMM rises over 4% for the week, eyeing best week since September 2023
  • GBP steady after landslide Labour win in UK general election
  • US jobs data on tap

The S&P/ASX 200 has inched lower at the end of the trading week, reversing course after two sessions of gains thanks to a drag in commodity and financial stocks.

The miners are down on the day with analysts at Citi raising concerns over the outlook for iron prices. On the week though, the sub-index is higher, eyeing its best week since September 2023 and is set to snap a six-week long spell of losses. It comes amid high hopes of more stimulus from top consumer China and robust near-term demand for iron ore.

BHP (BHP) is up nearly 4.5% in the week, set to snap three consecutive weeks of losses, while Rio Tinto (RIO) and Fortescue (FMG) are up nearly 5% and 4.5% respectively. The mining sub-index has lost 10.5% YTD as of last close.  

Energy shares are lower after an eight-session rally, with the sub-index on track for its best week since early May.Healthcare and info tech stocks are higher, while the real estate sector is under pressure after two sessions of gains.

In currency markets, the Australian dollar has jumped to a six-month high as yield spreads swung in its favour. The local unit is up over 1% for the week on the yen, to reach its highest since mid-1991.

Gains however have been underpinned by uncertainty over the RBA’s interest rate outlook on the heels of stubbornly high inflation. Markets are pricing in a 33% chance the Australian central bank could hike rates at its August policy meeting should the second quarter CPI print, due in late July, surprise to the upside.

In the news

Australian listed shares of Santos (STO) are in focus after Saudi Aramco threw cold water on media reports it was considering an offer for the company. Yesterday Bloomberg reported both it and Abu Dhabi National Oil Company had been separately considering bids for the Australian gas producer.

Shares are lower in today’s trade though are up nearly 4% for the week and over 5% this year as of last close.

Toysrus ANZ (TOY) shares are in a trading halt pending an announcement on a capital raise, while Pure Hydrogen (PH2) shares have surged as the clean energy company inks an MoU with California’s Riverview International trucks for distribution and supply of hydrogen fuel cell electric and battery electric trucks.

The stock is up 50% YTD, as of last close.

Finally in the broker space, Citi says it remains upbeat on the outlook for Lottery Corporation (TLC) in FY24, forecasting the consumer environment to improve given the Federal Government’s tax cuts and cost of living relief measures. ‘Buy’ rating is retained with a price target of $5.60 a share.

The stock is up about 2% this year, as of last close.

Jefferies meantime has raised its price target on New Hope (NHC) to $5 from $4.75 per share as the broker says the company is well-positioned to capitalise on growth opportunities, given modest debt levels. ‘Hold’ rating retained, shares are higher on the day, but down 2.7% this year as of last close.  

Morgan Stanley has raised its price target on insurer Suncorp (SUN) to $20.20 from $17.05 as the broker says it has a better earnings record than fellow insurer Insurance Australia Group (IAG). ‘Overweight’ rating retained, and the stock is up over 21% YTD as of last close.

Going global

Around the region, Asian equities are muted, with Japan’s Nikkei 225 flat, and Malaysia’s Kospi up around 0.7%.

In the US it’s all about tonight’s non-farm payrolls data for June. The market is expecting some 190,000 jobs to be created in the month, after a staggering 272,000 rise in May. It comes after a run of soft US data has seen markets revise up the chance of a September rate cut to 73%, according to the CME FedWatch tool.

US futures have opened mixed, with the Dow and S&P stronger while the NASDAQ is a touch in the red, ahead of the trading session after markets were closed yesterday in observance of the Independence Day holiday.

Across the pond, sterling held steady after exit polls showed the Labour party was set to win in a landslide majority in the UK general election.

UK futures have opened higher in the Asian session, while the FTSE 100 continues to flirt with record highs buoyed by a slow growing but relatively stable economy and cooling inflation.

 

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