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The ASX 200 rebounded strongly on Thursday, closing up +1%. The banks led the gains, with the “Big 4” up an average of nearly +2%, while the retail and tech names played strong supporting roles. Some clear reversion rolled through the market after Wednesday’s aggressive sell-off, although 25% of the market still closed lower, including some of the gold stocks, which started to experience some profit-taking. The rebound followed the local bourse’s worst trading day since April, after a surge in bond yields in the US, Japan, and the UK triggered concerns about fiscal spending and sticky inflation. However, this eased on Wednesday night following weaker-than-expected US job openings.
- Gains were even more impressive considering BHP Group (BHP), Amcor (AMC), Bapcor (BAP), Yancoal (YAL), NIB Holdings (NHF), Reliance Worldwide (RWC), and TPG Telecom (TPG) all traded ex-dividend.
Markets in the US are now pricing in a 97% probability that the Fed will cut interest rates at its upcoming policy meeting in two weeks. However, locally, the RBA is only expected to ease once more before Christmas. The local economy keeps ticking along, with Australia’s housing market sentiment improving in June due to easing interest rates, and seasonally adjusted household spending rose 0.5% to $77.28 billion in July following a 0.3% increase in June.
- While Thursday’s bounce doesn’t tell us the market’s retracement is over, it does illustrate the current fickle nature of the market and how quickly investors can return to “buy the dip.”
Overseas markets were strong ahead of tonight’s important US Jobs Report. In Europe, the EURO STOXX 50 and UK FTSE both closed up +0.4%. In the US, the S&P 500 tested its all-time high, closing up +0.8%, while the tech-based NASDAQ 100 performed slightly better, finishing up +0.9%.
- The SPI Futures are calling the ASX200 to open up +0.6%, following the strong session on overseas bourses, and helped by a 60c gain by BHP in US trade.
