Markets at a glance 7 August

Around the grounds

It’s a choppy session for the local share market, as weakness in miners and financials cap gains elsewhere on the S&P/ASX 200. Falling iron ore prices are keeping a lid on the heavy weight mining sector, while rate-sensitive financials are lower after the Reserve Bank of Australia (RBA) kept interest rates steady at a 12-year high for a sixth straight meeting yesterday, and seemingly ruled out the possibility of a rate cut this year as inflation remains sticky.

Elsewhere, gold stocks are under pressure tracking a fall in bullion prices, while energy stocks are higher on the tails of a stronger oil price.

Going global

Bigger picture Asian shares have found their footing taking cues from a bounce on Wall Street overnight as fears over a recession were reassessed and the unravelling of the yen carry trade looks to be stabilising.

For Japanese markets the turbulent week has continued, the Nikkei has swung up and down in today’s trade last up over 2% after falling more than the same amount earlier in the session. It comes after a 10% spike yesterday, which saw the index claw back some of the over 12% loss during Monday’s session, its biggest single day rout since 1987.

In response to the volatility, Bank of Japan (BoJ) Deputy Governor Shinichi Uchida has confirmed the central bank will not raise interest rates when markets are unstable, but added movements in the yen could impact the BoJ’s policy decisions.

More broadly, MSIC’s broadest index of Asia-Pacific shares outside Japan is trading a shade higher.  

Looking ahead to the US open, Nasdaq futures have eased after bouncing earlier, largely due to a 12% dive in AI darling Super Micro Computer after it missed earnings forecasts. S&P futures have steadied from an earlier drop, while European futures are higher.

To currencies, the yen has reversed course from a seven-month high hit earlier in the week but has strengthened from the previous session’s lows. As a result, the greenback is holding steady, the euro is little changed and sterling is flirting with a five-week low hit in yesterday’s trade, while the AUD and NZD are both marginally higher.

In the news

Quick check in on some of the stocks traders are watching, and Woodside Energy (WDS) shares have recovered some of this week’s losses after the company said it would snap up a Texas ammonia project for AU$2.3 billion. Driving the rise, Morningstar’s positive call on the deal, forecasting the takeover will be an important part of the oil and gas producer’s energy transition.

WDS shares are down 19% this year, as of last close.

Treasury Wine Estates (TWE) shares meantime have retreated after it revealed yesterday it would divest its commercial brand portfolio amid what it calls ‘challenging market conditions’ and flagged a non-cash impairment charge in relation to its premium brands business.  The brokers have moved in to respond with Jefferies expecting the company to ‘comfortable post’ double-digit growth in earnings for the next three years as U.S. conditions stabilise and the availability of luxury brands improves.  

TWE shares are up 7.5% this year, as of last close. ­­­

Sticking in the broker space, Westpac (WBC) shares are lower, as JPMorgan downgrades the stock to ‘underweight’ from ‘neutral’ as it says the stock is very expensive and the bank may face greater margin pressure in fiscal 2025-26.

Price target steady at AU$25/share. WBC has risen 22.1% this year, as of last close.

Finally - Australian listed shares of DUG Technology (DUG) have surged as the software development firm inks an exclusive licensing agreement with U.S.-based Baltimore Aircoil for patent rights of the company’s immersion-cooling technology.

The stock is up just shy of 38% this year, as of last close.

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