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Morning Research Notes - 25.07.24
US equities largely fell overnight, as Alphabet and Tesla disappointed on earnings, pulling the tech sector and broader market lower. Brent (oil) traded 0.3% higher, with the current price per barrel sitting at $82.06. Spot gold increased by 0.2%, with the current price per ounce standing at $2414.80. Volatility, as measured by the VIX index, decreased by 1.3% to $14.72.
The S&P 500 experienced its largest one-day loss since 2022, with tech stocks plummeting due to disappointing Q2 earnings from Alphabet and Tesla. Tesla’s stock fell by 12% as its profit margins hit a five-year low, despite optimism about future growth opportunities like robotaxis. Alphabet’s stock also fell by nearly 5%, despite exceeding Q2 earnings expectations. Meanwhile, Seagate Technology saw a 4% rise after its Q4 results surpassed estimates. Former Federal Reserve President Bill Dudley has called for rate cuts in response to recession concerns. Visa’s stock fell by 4% due to slowing payment volume growth, while AT&T’s stock rose by 5% after exceeding market expectations for wireless subscriber additions in Q2.
The ASX 200 fell by 0.09 % on Wednesday, with Utilities decreasing by (-0.42%), Financials gaining by (0.15%), Info-Tech falling by (-0.05%), and Health Care decreasing by (-0.29%). Growth was also seen in the Materials sector, rising by (0.39%). The commodity market remained largely neutral. Zinc decreased by (-0.83%), Copper fell by (-0.82%), Nickel declined by (-0.54%), whilst Iron Ore (0.3%) and Aluminium (0.22%) experienced gains.
In other news, CrowdStrike offers affected workers $US10 Uber Eats card, Macquarie's profit meet expectations, Ampol flags falling sales volumes. (Source: AFR)
Chart of the day
The global copper market is undergoing significant changes. Demand is shifting due to the energy transition, mass electrification, and AI, moving beyond traditional uses in construction and transportation. Urbanisation and technology investments are driving demand, potentially reducing volatility. However, supply challenges persist due to declining project economics and higher costs, leading to a scarcity of quality assets in Tier 1 jurisdictions like Chile, Canada, U.S., and Australia. As a result, there’s an increasing supply from lower-quality mining jurisdictions. Mining in these regions often comes with increased political and regulatory risks, higher capital intensity due to the lack of infrastructure, and increased risks of social unrest. Despite these challenges, the robust demand outlook for copper is pushing prices higher and increasing investment into the sector. Even with recent price pullbacks, the market shows potential for growth, supported by cyclical demand and global industrial recovery. The evolving demand dynamics, coupled with supply challenges, present both opportunities and risks, especially for miners with quality assets. It’s a pivotal time for all stakeholders to navigate carefully, considering both the economic and environmental implications of copper mining.
Source: Livewire markets
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