The RBA raised rates today by 0.25% to 4.35% inline with the majority of expectations and market pricing – we’re not surprised they did but we thought there was very little reason to do so. The reaction in markets told the story, stocks initially lower but reversed quickly to trade up (+20pts) from pre-announcement levels, while the currency fell (-0.80%) and so did bond yields, the reaction you’d expect at the end of a hiking campaign
Stocks started the week higher ahead of the RBA decision on interest rates tomorrow, a hike the more probable scenario according to both economists and interest rate futures, however on balance, we believe they shouldn’t and won’t hike as weakness creeps into the local economy, the 1H of 2024 could be a testing time for many people in Australia and we see no reason for the RBA to come off the sidelines after sitting pat for 4 straight meetings, especially given the changing bias in the US last week.
Stocks were up for a 4th straight session today with the main board now ~3.5% above this week’s low, a sharp turnaround since Jerome Powell hinted that the Fed has ended the most aggressive rate hiking cycle in history, with US 10-year yields now ~40bps below recent highs.
Dovish commentary out of the Fed overnight helped to support equity markets globally over the last ~12 hours, and the ASX was no exception. Interest rate-leveraged sectors of Tech and Real Estate were the most significant beneficiaries as the rally in bond yields cooled off. The US 2-year yields fell back below 5% and Australian bond yields were also lower throughout our session.
Some reprieve from recent weakness across the ASX today with stocks holding onto morning gains to finish at session highs, up 0.85%, after a weak October saw the market down 3.8%, underperforming global peers.
The local index saw the best of the day early on, starting off with a respectable ~0.60% rally thanks mostly to a bounce across the Big 4 banks. The strength slipped throughout the afternoon though with cracks in China’s economy leading Materials lower. The index traded down on the session late in the day but managed to close marginally higher.
For the past week, it felt like “when” not “if” the ASX200 would set a new 12-month low. That question was answered today as the local index fell further into despair, weighed on by the Energy, Financials and Consumer sectors. Tech was the only area of the market to buck the weakness, a solid result considering bond yields were broadly higher throughout Monday.
Equities managed a modest gain into the weekend, bucking the weakness of US markets overnight, though largely tracking the gains seen on their futures today. Investors were still wary of loading up too much risk today, highlighted by the weakness in the Tech sector today. Staples was a key winner, that sector hit 3-year lows yesterday but a broker upgrade for Coles (COL) saw some support.
Shares were 1pt off a 12-month low intraday today with pain in the interest rate leveraged Tech and Real Estate sectors under the most pressure. Tech was hit particularly hard following a soft session for the Nasdaq overnight and follow-through selling seen on its futures today. Materials once again put up a reasonable fight thanks to support in Iron ore stocks, and the second biggest sector constituent for the local market finished marginally higher.
The market was relatively strong early on, supported by solid overnight gains in the US and most commodity markets, however, the music stopped at 11.30m as local inflation data came in higher than expected. The ASX200 index fell 65pts from high to low by early in the afternoon, but a small fight back, led by the Materials sector with commodity support, helped to stem the bleeding with the final result of only a small fall on the market. That came despite just 2 sectors closing higher while Real Estate copped the brunt of the pain.
Stocks started the week higher ahead of the RBA decision on interest rates tomorrow, a hike the more probable scenario according to both economists and interest rate futures, however on balance, we believe they shouldn’t and won’t hike as weakness creeps into the local economy, the 1H of 2024 could be a testing time for many people in Australia and we see no reason for the RBA to come off the sidelines after sitting pat for 4 straight meetings, especially given the changing bias in the US last week.
Stocks were up for a 4th straight session today with the main board now ~3.5% above this week’s low, a sharp turnaround since Jerome Powell hinted that the Fed has ended the most aggressive rate hiking cycle in history, with US 10-year yields now ~40bps below recent highs.
Dovish commentary out of the Fed overnight helped to support equity markets globally over the last ~12 hours, and the ASX was no exception. Interest rate-leveraged sectors of Tech and Real Estate were the most significant beneficiaries as the rally in bond yields cooled off. The US 2-year yields fell back below 5% and Australian bond yields were also lower throughout our session.
Some reprieve from recent weakness across the ASX today with stocks holding onto morning gains to finish at session highs, up 0.85%, after a weak October saw the market down 3.8%, underperforming global peers.
The local index saw the best of the day early on, starting off with a respectable ~0.60% rally thanks mostly to a bounce across the Big 4 banks. The strength slipped throughout the afternoon though with cracks in China’s economy leading Materials lower. The index traded down on the session late in the day but managed to close marginally higher.
For the past week, it felt like “when” not “if” the ASX200 would set a new 12-month low. That question was answered today as the local index fell further into despair, weighed on by the Energy, Financials and Consumer sectors. Tech was the only area of the market to buck the weakness, a solid result considering bond yields were broadly higher throughout Monday.
Equities managed a modest gain into the weekend, bucking the weakness of US markets overnight, though largely tracking the gains seen on their futures today. Investors were still wary of loading up too much risk today, highlighted by the weakness in the Tech sector today. Staples was a key winner, that sector hit 3-year lows yesterday but a broker upgrade for Coles (COL) saw some support.
Shares were 1pt off a 12-month low intraday today with pain in the interest rate leveraged Tech and Real Estate sectors under the most pressure. Tech was hit particularly hard following a soft session for the Nasdaq overnight and follow-through selling seen on its futures today. Materials once again put up a reasonable fight thanks to support in Iron ore stocks, and the second biggest sector constituent for the local market finished marginally higher.
The market was relatively strong early on, supported by solid overnight gains in the US and most commodity markets, however, the music stopped at 11.30m as local inflation data came in higher than expected. The ASX200 index fell 65pts from high to low by early in the afternoon, but a small fight back, led by the Materials sector with commodity support, helped to stem the bleeding with the final result of only a small fall on the market. That came despite just 2 sectors closing higher while Real Estate copped the brunt of the pain.
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