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Wall Street gains on Powell's dovish rhetoric

ASR Team

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Morning Research Notes - 10.07.24


US equities broadly gained on Tuesday with Fed Chair Jerome Powell's providing dovish rhetoric in his testimony to congress. Brent (oil) traded 0.8% lower, with the current price per barrel sitting at $85.11. Spot gold also gained 0.1%, with the current price per ounce standing at $2361.39. Volatility, as measured by the VIX index, increased by 1.1% to $12.51.

The S&P 500 closed at a record high for the fifth consecutive session, gaining 0.1% to 5,577.03, as investors remained optimistic about a potential September rate cut despite Federal Reserve Chair Jerome Powell's testimony. Powell indicated that the labor market had cooled, suggesting that the economy was no longer "overheated," which bolstered expectations for an interest rate cut. The consumer price index data for June, due on Thursday, will provide further insights into inflation trends. Meanwhile, the NASDAQ Composite rose 0.2%, while the Dow Jones Industrial Average fell 53 points. Investors also focused on the upcoming second-quarter earnings season, starting with major banks like JPMorgan Chase, Wells Fargo, and Citigroup, and other notable companies such as PepsiCo and Delta Air Lines. Nvidia and Tesla saw gains, driven by rising AI demand and positive market sentiment, respectively, while Helen of Troy's stock dropped significantly due to disappointing earnings.

The ASX 200 increased by 0.85% on Tuesday, with Materials (0.59%), Financials (1.35%), Utilities (0.57%), Health Care (0.68%) and Info Tech (0.80%) all closing higher. Commodity markets ended the day broadly lower, with Zinc (-0.98%), Copper (-0.01%), Aluminium (-0.80%) and Nickel (1.33%) experiencing losses, whilst Iron ore (1.0%) saw gains.

In other news, Chile gets four lithium project proposals from Australia, Powell sees rising risks to jobs, defers on rate cut, and New suitor emerges for Booktopia, as bid deadline looms (Source: AFR)


Chart of the day

Today's chart shows employment growth in Australia from June 1982 to the present. It shows how net migration has been skewing employment figures since the end of the pandemic. Once net migration is stripped out of the headline figure, one can see that employment growth for Australian citizens has been virtually zero since the pandemic. It will be interesting to see how this could affect the federal governments migration and economic policy going forward.


Source: Livewire, Yarra Capital Management

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