The Monday Report (On Tuesday) – 02 April 2024

Daily Market Reports | Apr 02 2024

By Greg Peel

Thursday

The ASX200 had already blasted through the prior all-time from the open on Thursday, up 62 points, before gradually adding 15 more points across the session. It was end-of-month and end-of-quarter and a pre-long weekend bonanza.

Adding to the excitement, on the assumption bad news is good for the Australian economy at present, as it suggests sooner rather than later RBA cuts, were February retail sales data.

Sales rose 0.3% in the month when when 0.4% was expected. Sales had risen 1.1% in January but fallen -2.1% in December. Each month has its own tale to tell.

Sales were weak in December because we now all do our Christmas shopping in November to give thanks to America. Seasonal adjustment has yet to catch up to that trend. Sales growth in January was attributed to the summer holidays, the tennis, and the cricket.

Sales in February were a miss, but actually a much bigger miss than they appear. Growth would not have been as swift as 0.3% had it not been for certain seven sold-out concerts. Take her out of the equation and sales grew only 0.1%.

Annual growth was 1.6%. Annual inflation in February was 3.4%, so clearly volumes continue to go backwards.

Yet consumer discretionary rose 1.0% on Thursday. Bad news good (and everything went up anyway). The ten-year yield fell -4 points.

Helping to fuel the bonanza were dividends paid by BHP Group ((BHP)), Commonwealth Bank ((CBA)), Newmont Corp ((NEM)), Origin Energy ((ORG)) and Telstra ((TLS)), just to name five of sixteen ASX200 stocks that paid out on the day.

Materials was the best performer (+1.8%), as all of iron ore, gold and lithium chipped in. Energy (+1.1%) was helped by higher coal prices.

Real estate (1.7%) and utilities (+1.3%) eyed off rate cuts.

The worst performer on the day was financials 0.4%, but the banks had had a pretty good run in the quarter. Technology also lagged (+0.4%), because the Nasdaq has stalled.

Overall, there was a lot of window-dressing.

Thursday Night

Window-dressing had already begun in the US market during the week, and Thursday night continued the recent rotational theme, but trading was more lacklustre as Wall Street emptied.

The Dow and S&P500 each rose 0.1%, the Nasdaq fell -0.1%, and the Russell small cap rose 0.5%.

The S&P500 hit its 22nd record high for the year. It was up 10.2% for the March quarter – the best in five years. The index is up 27% from its October low. All three major indices posted a fifth straight month of gains.

Nvidia rose 82.5% in the quarter.

It is likely Wall Street did not want to get too carried away on Thursday night with the February PCE due on Friday morning.

Oil prices rose another 2% on Thursday night as weekly US inventories came in lower than expected. WTI crude was up 6.3% for the quarter.

There has been a lot of M&A activity in the oil space recently. Cash-rich companies have been buying production rather than opening new wells, meaning US supply is capped.

It is not unusual for the S&P500 to rally 27% over five months. In fact it has happened 130 times. As commentators begin to fret over an overdue correction, it is noted only once in 130 occasions has the index been lower 12 months later.


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