Daily Market Reports | Apr 29 2024
By Greg Peel
Dummy Spit
The S&P500 had fallen -0.5% on Thursday night, having fallen by almost twice that much earlier in the session, and the local market followed with a typical get-me-out Friday. The ASX200 fell a full -1.4%. It seems when we have these dummy spits, the index has to fall by at least a ton.
Investors could perhaps take some heart in the fact it was a Friday amidst school holidays and/or a cheeky long weekend for those who took it. Indeed, the losses were all booked right from the open.
But if we try to blame a thin market, we need only look at Wall Street’s solid bounce on Friday night – the S&P500 rising 1.0% -- and note that our futures rose only 0.3% by Saturday morning.
The Aussie ten-year yield rose 11 points on Friday to 4.52%, while the twos rose 10 points to 4.18%. That’s now only a -17 point difference to the RBA cash rate of 4.35% -- less than one rate cut. Hopes for a rate cut in 2024 are becoming increasingly dashed.
The fall on Wall Street was driven by a weaker than expected GDP, and higher than expected inflation component therein. But Friday night’s US PCE data saved the day, along with a couple of earnings results.
All sectors closed meaningfully in the red on Friday, with industrials faring worst (-2.2%) despite not one stock standing out, and the banks, which had been surprisingly strong all week, being crushed (-1.6%).
Healthcare was the least-worst performer (-0.6%), thanks to a quarterly result from ResMed ((RMD)). That stock rose 9.6% on the day, but in the US on Friday night, it rose 18.9%.
Newmont Corp ((NEM)) also reported a quarterly and rose 13.9%, but that didn’t save materials (1.4%). BHP Group ((BHP)) shares dropped -4.6% on news it is keen on acquiring Anglo-American.
Real estate was understandably another big loser (-2.0%) as was communication services (-1.9%). Discretionary fell -1.4% and staples could not manage a decent defensive performance, falling -0.9%.
The other defensive standout of late – utilities – also fell -0.9%.
School is back this week so hopefully we have everyone back on board today to see if we can do any better than a 24 point rebound.
Attention will then turn to Wednesday night’s Fed meeting.
As easy as A-B-C
Shares in Alphabet, the parent company of Google, rose 10.2% on Friday night, having reported earnings in Thursday night’s aftermarket. That’s a pretty big move for a company that has now passed US$2trn in value.
AI and cloud rival Microsoft, which has been outperforming Google this year due to perceived AI superiority, rose 1.8% on its result.
All things being equal, these results should have spurred Wall Street on, wiping out the impact of Meta’s weak result, but it would come down to Friday night’s US March PCE data.
The headline PCE rose 2.7% when 2.6% was forecast. While “hot”, it’s not as hot as feared following the preceding CPI and PPI data.
The core PCE rose 2.8% when 2.7% was expected; unchanged from February, so arguably not hot at all.
The US ten-year yield fell -4 points to 4.70%.
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