Daily Market Reports | May 06 2024
By Greg Peel
Grafting
On Wednesday, the ASX200 plunged on more hot US inflation data, and an attempt to rally back during the session was thwarted. The Fed then provided some relief on Wednesday night, but again a rally locally fizzled out to the close. Friday again saw the ASX200 come off from its high to the close, but not by much this time.
It’s a hard slog.
All sectors closed in the green on Friday. Discretionary was the standout performer (+2.0%) as Wesfarmers ((WES)) shares gained 2.8% post strategy day, and Star Entertainment ((SGR)) shares bounced back 6.1%.
Materials underperformed (+0.2%) on mixed moves in commodity prices. Evolution Mining ((EVN)) was the worst index performer (-5.6%) on a fall in the gold price.
In between, volatile real estate rose 1.6% as bond yields slipped a little further and Goodman Group ((GMG)) led the charge as usual, while technology (+1.2%) took heart from a positive result from Apple in the US aftermarket and a 9.8% jump for Block ((SQ2)) on its quarterly result.
The banks also lagged (+0.3%) after Macquarie disappointed once more with its earnings and fell -2.2%.
Other sectors gained 0.4-0.7%.
In economic news, total housing approvals rose 1.9% in March, with houses up 3.8% and apartments 3.6%.
Housing finance rose 3.1%, with owner-occupier loans up 2.8% and investors 3.8%.
ANZ Bank economists note approvals remain low despite increased lending and rising prices, but expect approvals to grow over the remainder of the year as housing prices rise and labour shortages ease.
Wall Street had another good run-up on Friday night on the jobs report and Apple, but mostly driven once more by Big Tech. With the S&P500 up 1.3%, our futures managed only 0.3% on Friday night.
Keeping the Doctor Away
The US added 175,000 jobs in April when 240,000 were expected, and the unemployment rate edged up to 3.9% from 3.8%. Wage growth also eased to an annual rate of 3.9% from 4.1% in March.
Just what the doctor ordered.
Wall Street ran scared last Tuesday night on a GDP result showing higher than expected inflation and slower growth, leading to renewed fears of stagflation. On Wednesday night Jerome Powell mocked any notion of stagflation, and was more dovish in his commentary than had been feared.
Suddenly Wall Street is talking rate cuts again, with the odds for a September cut rising to close to 50%, although there are some economists still forecasting a July cut.
The US ten-year yield fell -7 points to 4.50%, having been as high as 4.75% recently.
Wall Street has a spring in its step once more.
Also helping were last week’s strong earnings results, starting with Amazon and culminating in Apple shares rising 6% on Friday night.
Apple posted results that were not as bad as feared, with Chinese sales in particular a relief, leading to a beat in both revenues and earnings. The company also announced a US$110m buyback, which rather helps. The stock has underperformed this year so it is a good use of Apple’s cash pile.
Much faith is being placed in the new iPhone 16, due later in the year. Recent iPhone launches have underwhelmed with only incremental improvements with each new model, leading to lower than usual upgrades from consumers.
The next iPhone is expected to feature a step-jump, introducing some sort of yet unknown AI capability that will have consumers rushing to ditch their old phones.
Another Dow component, Amgen, jumped 10% on positive results for trials of its new GLP-1 drug.
2024 is being touted as the year of AI and GLP-1.
The full story is for FNArena subscribers only. To read the full story plus enjoy a free two-week trial to our service SIGN UP HERE
If you already had your free trial, why not join as a paying subscriber? CLICK HERE