Markets at a glance 6 August
Around the grounds
The local share market has stabilised after a manic Monday saw some $80 billion wiped off the ASX. Five of the 11 sectors are higher, while tech is trading flat and gains in Financials are helping to offset a slip in commodity stocks.
Of course, investors were laser focused on today’s interest rate decision where, as expected the Reserve Bank of Australia kept the benchmark on hold at 4.35% but continued to reiterate it hasn’t ruled out further increases if needed to control inflation. Traders had wagered heavily on a hold from the central bank after second quarter core inflation cooled, and recent swings in global equity markets argued for a cautious policy stance.
Looking more broadly at today’s trade Australian gold stocks have slipped to a near four-week low as the price of bullion fell on a wider market sell-off driven by mounting economic concerns. The sub-index is on track for its second straight day of losses if the current trend holds. Gold stocks are up around 7% YTD, as of last close.
Energy stocks continue under pressure, retreating nearly 2% while miners are trading sideways as the price of iron ore drifts lower on the tails of receding near-term buying appetite after more Chinese steelmakers record losses.
Going global
Let’s get to the global stage, of course it’s all about Japanese markets, the Nikkei 225 has rebounded sharply after posting its biggest sell-off since 1987 yesterday. The index soared over 3,000 points in early trade, surpassing its largest intraday points gain on record, the TOPIX has also recovered, rising over 9%. From July11 to Monday’s close, the Nikkei has seen 113 trillion yen, or AU$792 billion, wiped out.
Through the morning session, circuit breakers were triggered multiple times, causing the temporary suspension of trading in TOPIX and Nikkei futures. So, what was the trigger? A raft of disappointing data from the US, alongside disappointing earnings from the major tech plays, which sparked a global sell-off in stocks on fears of a recession looming.
In FX markets the greenback is nursing steep losses, as the yen returns to the backfoot after touching a seven-month high. It comes as traders’ contend with unwinding of popular carry trades and the prospect of deep rate cuts from US Federal Reserve. Markets are now pricing in 109 basis points of easing this year from the Fed, with a 50 bps cut in September price in at 75%, according to the CME FedWatch Tool.
The euro is little changed, while sterling is slightly stronger.
Looking ahead, US futures are set to come online in rally mode, with all three of the majors expected to make a comeback and open well in the green.
In the news
And a quick check on some of the stocks to watch in today’s trade. Macquarie Group (MQG) shares are tracking higher as the company says it will buy a South Korean data centre for AU$535 million, in a bid to meet rising demand for cloud and AI-related services.
The stock is up 6.6% YTD, as of last close.
Shares of Australian listed Treasury Wine Estates (TWE) are also higher as the country’s biggest wine producer unveils plans to divest its commercial brand portfolio amid what it calls “challenging market conditions”. Some optimism though as the company expects a 13% rise in underlying earnings in fiscal 2024 despite an AU$290 million impairment charge from its premium brands division.
The stock has risen 7.5% this year as of last close.
Shares of Magellan Financial (MFG) are higher after the fund manager reported total funds under management rose to AU$38.4 billion as of July 31. Shares are up just shy of 1% YTD, as of last close.
A very different story for Australian listed shares of Audinate (AD8), tanking over 50% at one stage, eyeing their worst day ever if losses hold. It comes as the company flags gross profit in FY25 will be marginally lower than fiscal 2024, largely driven to declining revenues. AD8 shares are down nearly 18% YTD, as of last close.
Woodside (WDS) is also sharply lower, falling nearly 5% to touch a two-year low after the company announced it would acquire a green carbon ammonia project in Texas with an AU$2.3 billion price tag.
Finally, reporting season is starting to kick into gear, heavy hitters James Hardie (JHX), CBA (CBA), AMP Ltd (AMP) and Transurban (TCL) are all on the docket this week.
All prices and analysis at 6 August 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.