Daily Market Reports | 8:47 AM
This story features HUB24 LIMITED, and other companies. For more info SHARE ANALYSIS: HUB
| World Overnight | |||
| SPI Overnight | 7998.00 | – 4.00 | – 0.05% |
| S&P ASX 200 | 8017.60 | + 58.30 | 0.73% |
| S&P500 | 5631.22 | + 15.87 | 0.28% |
| Nasdaq Comp | 18472.57 | + 74.12 | 0.40% |
| DJIA | 40211.72 | + 210.82 | 0.53% |
| S&P500 VIX | 13.12 | + 0.66 | 5.30% |
| US 10-year yield | 4.23 | + 0.04 | 0.95% |
| USD Index | 104.26 | + 0.17 | 0.16% |
| FTSE100 | 8182.96 | – 69.95 | – 0.85% |
| DAX30 | 18590.89 | – 157.29 | – 0.84% |
By Chris Weston, Head of Research, Pepperstone
Good morning.
-Trump 2.0 trades to focus
-US energy and financials outperform
-Fed chair Powell gaining increased confidence from recent inflation reads
-Opening calls for Asia equity markets
The Trump trade has been seen front and centre across markets, and while some attention has been placed on Fed chair Jay Powell’s interview with David Rubenstein, as well as the spluttering of US corporate earnings that are starting to roll in, it’s the Trump 2.0 trades which stand out.
Notably, we see these expressions in the US bond market, with the US 2s vs 10s, and US 2s vs 30s yield curves continuing to steepen intently, with the 2s vs 30s curve un-inverting for the first time since January. Bitcoin has gained 6.2% and eyes a move into 64k, and while the crypto scene still has SEC chair Gary Gensler as a consideration on the regs side, potentially having the leader of the free world in your corner will always sit well with crypto heads.
Crude oil sits -0.3%, but we see S&P500 energy-related equity names firing up with the S&P500 energy sector the best performer on the day, followed closely by financials which have seen tailwinds from strong numbers from Goldman Sachs with the stock breaking to new highs and looking really well supported while the steeper yield curve also offers tailwinds to the banks.
In the session ahead, earnings from Bank of America and Morgan Stanley will keep the banks in the spotlight, while UnitedHealth (UNH) also reports pre-market not a stock well traded by the short-term players, but it does have an 8.4% weight on the Dow, and with options markets implying a -/+4.4% for UNH on the day of earnings, we could see some increased life in the well-traded Dow in the session ahead.
While the S&P500 closed +0.3%, US small caps have once again attracted good attention with the Russell2000 breaking to new cycle highs and I see this pushing higher in the near term.
Fed chair Jay Powell did mention the recent inflation reads “do add somewhat to confidence”, and with that, we’ve seen the US swaps market price a September rate cut at 100%, with -65bp of cuts (or 2.5x -25bp cuts) now priced by December.
The market feels validated the Fed chair is turning far more aligned and receptive to its view. In the session ahead we get US retail sales and with expectations of a -0.3% contraction, this data point could have modest implications on current interest rate expectations.
With the Republican National Convention underway, the new news is that Trump has picked JD Vance as his running mate. Vance is firmly “America-First” and a protectionist hawk’ when it comes to trade, national security, and immigration.
JD Vance sits in the camp of taking China on head-first in a bid for improved trade deals for the US, and this will only weigh on sentiment towards China, where we saw better selling in China equity yesterday and while China’s Q2 GDP was weaker than expected (4.7% vs 5.1% eyed) our opening calls suggest another day of selling.
Despite these leads, we see the ASX200 opening on a flat note, and given the 0.7% rise yesterday, with the index holding firmly above 8000, the tailwinds are there and weakness in the index should be well supported.
On the calendar today:
-Hub24 ((HUB)) Quarterly update
-Metcash ((MTS)) ex-div 8.50c (100%)
-US June retail sales
Corporate news in Australia:
-ABC’s Four Corners digs into Hotel California-style contracts in landlease industry with Lifestyle Communities ((LIC)) in Victoria the main target (among the alleged practices is charging fees from deceased people)
-Rumours have it gold miners Gold Road Resources ((GOR)) and Regis Resources ((RRL)) are in merger talks
– Performance issues at The Star Entertainment Group ((SGR)) following system upgrade
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 2427.00 | + 11.00 | 0.46% |
| Silver (oz) | 31.32 | + 0.30 | 0.97% |
| Copper (lb) | 4.51 | – 0.07 | – 1.51% |
| Aluminium (lb) | 1.11 | – 0.01 | – 1.12% |
| Nickel (lb) | 7.54 | – 0.07 | – 0.96% |
| Zinc (lb) | 1.33 | – 0.00 | – 0.04% |
| West Texas Crude | 80.89 | – 0.11 | – 0.14% |
| Brent Crude | 85.27 | 0.00 | 0.00% |
| Iron Ore (t) | 109.67 | + 0.08 | 0.07% |
The Australian share market over the past thirty days
| Index | 15 Jul 2024 | Week To Date | Month To Date (Jul) | Quarter To Date (Jul-Sep) | Year To Date (2024) |
|---|---|---|---|---|---|
| S&P ASX 200 (ex-div) | 8017.60 | 0.73% | 3.22% | 3.22% | 5.62% |
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| ALD | Ampol | Downgrade to Hold from Buy | Ord Minnett |
| AOF | Australian Unity Office Fund | Downgrade to Accumulate from Buy | Ord Minnett |
| APA | APA Group | Downgrade to Hold from Buy | Ord Minnett |
| HUB | Hub24 | Downgrade to Neutral from Buy | Citi |
| ORG | Origin Energy | Downgrade to Hold from Accumulate | Ord Minnett |
| WDS | Woodside Energy | Upgrade to Neutral from Sell | Citi |
For more detail go to FNArena’s Australian Broker Call Report, which is updated each morning, Mon-Fri.
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CHARTS
For more info SHARE ANALYSIS: GOR - GOLD ROAD RESOURCES LIMITED
For more info SHARE ANALYSIS: HUB - HUB24 LIMITED
For more info SHARE ANALYSIS: LIC - LIFESTYLE COMMUNITIES LIMITED
For more info SHARE ANALYSIS: MTS - METCASH LIMITED
For more info SHARE ANALYSIS: RRL - REGIS RESOURCES LIMITED
For more info SHARE ANALYSIS: SGR - STAR ENTERTAINMENT GROUP LIMITED