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A positive session for the ASX, though the best of it was seen early keying off a great move yesterday and positive flows in the US overnight, as the markets has quickly priced in the prospect of a rate cut in Australia this year, but probably more importantly, no further rate hikes. UBS changed their forecast this morning from a hike in August to no change, while Futures are now pricing a 63% chance of a cut before Santa arrives. In the US overnight, the Fed pretty much confirmed a September cut. In July the Fed said they needed to be more confident inflation was on the right track, overnight they said they ‘had’ more confidence that inflation was on the right track, laying the foundation for a move.
….a quick note this afternoon
- The ASX 200 added +22pts/ +0.28% closing at 8114, a new all-time closing high.
- Property (+1.69%), IT (+1.62%) and Energy (+1.16%) led the line.
- Financials (-0.37%), Industrials (-0.23%) and Healthcare (+0.15%) lagged the broader gains.
- Interestingly, a change in positioning by the market on rates should be a negative for bank margins, and we started to see that play out today, with some weakness across the sector (bar ANZ).
- Over the last year, NAB is the best performing bank up 34%, while ANZ is up 12% – huge relative underperformance by the new owner of SUN. Some reversion lively.
- Sandfire Resources (SFR) +4.48% was strong today, and this remains our No 1 resource pick.
- Cameco (CCJ US) reported production numbers in Canada overnight, we need to review further, however at first read there doesn’t appear to be much in the result to impact the overall uranium market i.e.it was good quarter and production is tracking to guidance
- Droneshield (DRO) -14.8% fell after raising money at $1.15, closed at $1.19.
- Monadelphous (MND) -4.9% fell after its contract with Albemarle (ALB US) was terminated as part of their plan to stop its lithium-processing expansion in WA. ALB US were up last night on okay results.
- Iron Ore was 2% higher in Asia.
- Gold was off $US5 in our time zone today, though had a great session overnight, trading at $US2441/oz
- Stocks in Asia were mixed, Hong Kong flat, the Nikkei in Japan was off 3% while Chinese equities fell 0.20%.
- US Futures are higher, up around 0.40%
- US companies we own reporting this week: Thursday 1st August: Apple (AAPL US), Peabody Energy (BTU US).
