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A solid end to a good week for Australian shares, the ASX200 up 1.5% inclusive of dividends, with the Material sector driving the gains – the first time for a while – with the financials the only sector to lose ground.
Many investors expected the US Presidential debate to be the focus this week, but Vladamir Putin stole the thunder from Harris and Trump. The Russian President is considering restrictions on uranium, titanium, and nickel exports – he is playing a tough “game of chicken” because Russia needs the money but is keen to limit sanctions by the West due to the war with Ukraine.
A solid session today with broad-based buying and importantly, both index heavyweights (Banks & Miners) made strong headway. The bid is coming back into the resources and if banks can just hold it together, the index should finally breakout to be highs, now less than 100pts away.
We are making several changes to this International Equities Portfolio.
Overseas stocks experienced a mixed night, and European indices delivered varied performances. The EURO STOXX 50 advanced 0.3%, while the FTSE fell -0.15%. The US market delivered an impressive turnaround after initially plunging on a higher-than-expected inflation print – US August CPI +0.3% MoM versus 0.2% expected. Stocks initially tumbled after the CPI but investors chased shares of mega-cap tech and semiconductor names in afternoon trading with heavyweight Nvidia (NVDA US) closing up +8.2%.
A weak session for the US banks, not something we’ve seen on the local bourse this year, dragged the Dow lower overnight but not in any meaningful manner. The American banking sector has been consolidating its strong advance from its 2023 low around current levels for the last six months, albeit in a volatile manner. Following the comments from JPM, a re-test of the August lows wouldn’t surprise; around 8% lower. This is not a great read-through for the ASX banks, which are trading at multi-year highs.
Yesterday the market was weak on open and rallied, today the opposite played out, strong on open before tapering off throughout the day implying indecision remains. Banks hit their highs in the morning, Resources were mixed, though Energy, led by Uranium stocks fired up after a tough period.
A quick chemistry lesson: The rare earth elements (REE) are seventeen metallic elements, which are categorised into Light Rare Earths (lanthanum to samarium) and Heavy Rare Earths (europium to lutetium). Rare-earth elements (REE) are necessary for more than 200 products across various applications, especially high-tech consumer products, such as mobile phones, computer hard drives, electric and hybrid vehicles, flat-screen monitors and televisions. The REE market is valued at $US6.0 bn in 2024 and is projected to increase to $US10.9 bn by 2029.
The excuse for Friday’s sell-off was about a poor labour market print, however, non-farms barely missed the mark, consistent with cooling and normalisation as opposed to an economy on the cusp of recession, which is how the market seemed to interpret it. In any case, we continue to expect heightened volatility through September as the market lurches from data point to data point.
