Further consolidation at the index level today, though there was some big moves in stocks and some clear divergence across sectors, unfortunately, we were end of a downgrade from Mirvac (MGR) while weakness amongst resources and energy stocks worked against us.
A reasonable day for the ASX buoyed by relative calm in Asia, the Nikkei in Japan up ~1% while US Futures also improved during our time zone. Buying was tentative, but broad-based, with 9/11 sectors trading higher. We get the sense that volatility is not over, more likely to be a pause, the carry trade in Japan still has some way to play out, and given we don’t get any data of substance in the US for the remainder of the week to throw markets much in either direction, a period of consolidation in the very short term seems the most likely scenario.
No change as expected today from the RBA with rates staying at 4.35%. They talked to the pace of disinflation slowing, while they maintained its previous guidance that it was not “ruling anything in or out” when it came to interest rates, the board said policy would need to be “sufficiently restrictive” until the board was confident inflation was “moving sustainably towards the target range”. This view is at odds with the market, Interest rate futures fully pricing in a cut before Christmas as the table below shows (29bps priced in), and an interest rate of ~3.5% by the end of FY25. The new press conference format provided a bit more meat on the bones of this view, and the Governor even had a crack at explaining volatility in equities over the past 48 hours, saying that one employment print in the US shouldn’t have us running for the hills…not bad advice from Governor Bullock!
A brutal day across markets, the worst since 2020, with the ASX200 whacked 3.7%, Small Caps hit 4.5%, Japanese stocks down over 10%, with 99% of the main board in Australia closing lower (i.e. 2 stocks out of 200 finished up)! Our market started on the back foot but as Asian markets struggled and US Futures continued lower (Nasdaq Futures down 5.5% at our close), there was no reason to stand in front of the momentum – the index closing only ~15 points above its nadir. This is a headline-grabbing day, and taken in isolation, it’s a big move by the market, however, the magnitude is at least partially a product of just how strong the market has been, hitting a new record high at 8148 only 3-sessions ago.
A tough session for equities to end the week and after twice making new all-time highs the ASX200 finds itself up just +0.25% for the week, well under the psychical 8000 level after testing 8150 on Thursday morning. A heavy fall on Wall Street set the tone and as recession fears escalated after weak US economic data tipped the scales away from the heavily embraced "Goldilocks" view.
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 Australian this year, but probably more important, 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.
The ASX surged higher, bonds rallied (yields lower), the AUD fell and the RBA breathed a huge sigh of relief with inflation data coming in cooler than expected today, taking rates hikes off the table, and bringing back the probability of cuts this side of Christmas. Rate-sensitive stocks soared, though the buying was broad-based based with over XX% of the main board finishing in the black.
The market was lower today, though it recovered nearly 60 points from the lows so showed some backbone into weakness, with consumer discretionary stocks following their US peers higher, while Financials remained well supported.
The ASX 200 is back testing the 8000 level with broad-based gains to kick off an important week. Local inflation data out on Wednesday the headline act, while Q2 earnings in the US increase and local reporting season slowly builds steam.
A solid session to end a tough week for stocks, though as we near the end of the July the ASX remains higher for the month, up nearly 2%, with a bullish start tapering off as large cap technology stocks experience recent momentum unwinding as the expectations around interest rates permeate through markets. US rates are about to come down, which has underpinned a reversal of recent themes with more economically exposed sectors and smaller companies starting to outperform the narrow cohort of technology stocks that have underpinned the markets performance over the past year. Trends are clearly changing, which creates some short term instability, however ultimately, this is positive for the broader health of the market, the ASX today breaking back up through 7900 as we work on creating a new trading range into August.
A reasonable day for the ASX buoyed by relative calm in Asia, the Nikkei in Japan up ~1% while US Futures also improved during our time zone. Buying was tentative, but broad-based, with 9/11 sectors trading higher. We get the sense that volatility is not over, more likely to be a pause, the carry trade in Japan still has some way to play out, and given we don’t get any data of substance in the US for the remainder of the week to throw markets much in either direction, a period of consolidation in the very short term seems the most likely scenario.
No change as expected today from the RBA with rates staying at 4.35%. They talked to the pace of disinflation slowing, while they maintained its previous guidance that it was not “ruling anything in or out” when it came to interest rates, the board said policy would need to be “sufficiently restrictive” until the board was confident inflation was “moving sustainably towards the target range”. This view is at odds with the market, Interest rate futures fully pricing in a cut before Christmas as the table below shows (29bps priced in), and an interest rate of ~3.5% by the end of FY25. The new press conference format provided a bit more meat on the bones of this view, and the Governor even had a crack at explaining volatility in equities over the past 48 hours, saying that one employment print in the US shouldn’t have us running for the hills…not bad advice from Governor Bullock!
A brutal day across markets, the worst since 2020, with the ASX200 whacked 3.7%, Small Caps hit 4.5%, Japanese stocks down over 10%, with 99% of the main board in Australia closing lower (i.e. 2 stocks out of 200 finished up)! Our market started on the back foot but as Asian markets struggled and US Futures continued lower (Nasdaq Futures down 5.5% at our close), there was no reason to stand in front of the momentum – the index closing only ~15 points above its nadir. This is a headline-grabbing day, and taken in isolation, it’s a big move by the market, however, the magnitude is at least partially a product of just how strong the market has been, hitting a new record high at 8148 only 3-sessions ago.
A tough session for equities to end the week and after twice making new all-time highs the ASX200 finds itself up just +0.25% for the week, well under the psychical 8000 level after testing 8150 on Thursday morning. A heavy fall on Wall Street set the tone and as recession fears escalated after weak US economic data tipped the scales away from the heavily embraced "Goldilocks" view.
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 Australian this year, but probably more important, 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.
The ASX surged higher, bonds rallied (yields lower), the AUD fell and the RBA breathed a huge sigh of relief with inflation data coming in cooler than expected today, taking rates hikes off the table, and bringing back the probability of cuts this side of Christmas. Rate-sensitive stocks soared, though the buying was broad-based based with over XX% of the main board finishing in the black.
The market was lower today, though it recovered nearly 60 points from the lows so showed some backbone into weakness, with consumer discretionary stocks following their US peers higher, while Financials remained well supported.
The ASX 200 is back testing the 8000 level with broad-based gains to kick off an important week. Local inflation data out on Wednesday the headline act, while Q2 earnings in the US increase and local reporting season slowly builds steam.
A solid session to end a tough week for stocks, though as we near the end of the July the ASX remains higher for the month, up nearly 2%, with a bullish start tapering off as large cap technology stocks experience recent momentum unwinding as the expectations around interest rates permeate through markets. US rates are about to come down, which has underpinned a reversal of recent themes with more economically exposed sectors and smaller companies starting to outperform the narrow cohort of technology stocks that have underpinned the markets performance over the past year. Trends are clearly changing, which creates some short term instability, however ultimately, this is positive for the broader health of the market, the ASX today breaking back up through 7900 as we work on creating a new trading range into August.
Check your email for an email from [email protected]
Subject: Your OTP for Account Access
This email will have a code you can use as your One Time Password for instant access
Verication email sent.
Check your email for an email from [email protected]
Subject: Your OTP for Account Access
This email will have a code you can use as your One Time Password for instant access
!
Invalid One Time Password
Please check you entered the correct info, please also note there is a 10minute time limit on the One Time Passcode
To reset your password, enter your email address
A link to create a new password will be sent to the email address you have registered to your account.
Market Matters members receive daily market reports, real-time trade alerts, full access to 5 portfolios and dynamic company data.
Choose how you'd like to proceed:
We have a range of membership options to suit your needs and budget, why not join today and get unlimited access to the premium Market Matters service.
