Archives: Reports
Friday’s US jobs data showed further signs of an easing labour market, which adds additional support to the case for the FOMC to begin cutting interest rates over the next few months – the futures market is anticipating the first cut in September. The action under the surface of the US bond market is an interesting one, with the gap between the 2s and 10s steepening to almost 20bps as markets price in more issuance down the track to pay for the likely increased spending of whoever wins the November election
The ASX200 ended the first week of July up +0.7%, an encouraging performance considering the dip on Monday/Tuesday. The Energy and Materials Sectors led the gains, which weren’t broad-based, with seven of the market’s eleven main sectors closing lower. At MM, we haven’t hidden our view that these two sectors are set to outperform through FY25. However, we’re very conscious that one week doesn’t change a trend—the previously high-flying tech and utilities sectors were the market’s worst-performing sectors last week
A bit of a nothing end to the week with the ASX down mildly as we await key employment data from the US tonight, and digest the Labour Party win in the UK, ahead of the 2nd round of French elections this weekend. After a shaky start to FY25, we got our mojo back midweek to chalk up a reasonable gain, underpinned by good moves from Energy & Resources.
The UK election looks already done and dusted, a relatively clear affair with Labour poised to return to power after 14 years in the wilderness. However, the French election on Sunday is still a close call. Recent polls suggest Marine Le Pen will be short of the numbers to achieve a majority, in line with our thoughts over recent weeks, and European bourses rallied accordingly.
Overnight, European bourses improved ahead of Sunday’s French election, with the French CAC 40 closing up +1.2%. At the same time, US indices posted fresh all-time highs in a shortened session ahead of Independence Day. US bond yields fell after weaker-than-expected economic data reinforced the case for the Fed to start cutting rates this year as “bad news remains good news“ for equities – the data showed the US services sector contracted at the fastest pace in four years. The S&P 500 has added more than $16 trillion in value from a closing low in October 2022, thanks to solid earnings, the spectacular surge in artificial intelligence and expectations that interest rates will drop.
While it was far from convincing, the ASX chalked up its first positive session for FY25 today, with the sectors that have been ‘doing it tough’ contributing most to the gains, plus of course the IT stocks that remain well supported. Uranium shares rallied and so too did the coal companies as they chalk up strong gains for the week so far, while weakness across the banks tempered enthusiasm at the index level.
The ASX200 drifted lower on Tuesday, ending the session down -0.4%. Investors found the sidelines the most appealing option ahead of the US Jobs Report on Friday, after Independence Day on Thursday, and the troublesome French election looming on Sunday. Over 60% of the main board fell on the second day of the new FY, with only the Energy Sector offering some bullish resistance. However, losses were limited outside of the lithium (Li) stocks – we will look at these further later on.
Back-to-back losses for the ASX to kick off FY25 with broad-based selling knocking 10 of 11 sectors lower, though only one sector fell by more than 1%. On the flip side, Energy was again the standout with Coal stocks breaking out amid supply disruptions.
The ASX200 started the week in stoic fashion on Monday, reclaiming over 70% of early morning losses to end the first day of July down -0.2%. It was a rare session for 2024 when the miners were the backbone of the index while the banks, tech, retail, and real estate stocks were the weak links. However, with FY25 only one day old, we’re not paying any attention to stock/sector rotation. Locally, the economic data remains tepid at best, which might help the RBA resist calls for a rate hike in August:
