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Weak economic data drives Wall Street lower

ASR Team

Self-directed investors have relied on Australian Stock Report for over 20 years to provide them with comments on the Australian stock market and useful insights. We provide Australian investors with market news and research to make decisions that would help manage their savings, build a sustainable income, and potentially achieve capital growth.

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Image Source: Adobe Stock

 

Morning Research Notes - 02.08.24

 

On Thursday, US financial markets witnessed a significant selloff on the back of weak economic data, with tech giants like Nvidia and Tesla experiencing falls, whilst Meta enjoyed a surge following positive quarterly earnings. The price of spot gold increased by 0.7% to $US2428.08 per ounce. Meanwhile, Brent crude saw an increase of 2.8%, bringing its price up to $US80.79 per barrel. The price of iron ore saw an increase of 2.5%, rising to $US101.55 per Tonne. Volatility, as measured by the VIX index, increased by 6.57% to US$17.69.

Yesterday, the market saw significant movements with Nvidia and Tesla falling by 6.7% and 6.6% respectively, as Meta rallied by 4.8% following better-than-expected quarterly results. The NYSE Fang + Index slid by 2.7%, whilst the VIX surged by 13.6%. Weaker than anticipated manufacturing PMI of 46.8 (vs the 48.8 forecasted) and hot unemployment claims drove investor concerns over the US economy, with market sentiment distinctly bearish. As a result, the yield on the US 10-year note fell below 4%.  In the UK, gilts (bonds) rallied after the Bank of England cut interest rates, leading to strong falls in UK gilt yields. 

On Thursday, the ASX 200 demonstrated a steady upward trend, closing with 0.28% higher. This trend was mirrored across most major sectors. The Healthcare, Utilities, and Materials sectors saw modest increases of 0.15%, 0.60%, and 0.70% respectively. The Information Technology sector, however, experienced a substantial rise of 1.62%. In contrast, the Financials sector witnessed a slight price decrease, dropping by 0.37%. Commodity markets witnessed a downturn on Thursday, with Aluminum, Copper, Zinc, and Nickel decreasing by 1.04%, 0.18%, 0.49%, and 2.34% respectively.

In other news, NexGen updates costs of Rook project, Macquarie Group eyes $1b capital notes, Sky City Auckland temporarily shuts gambling area. (Source: AFR)

 

Chart of the day

 

Despite the Federal Reserve’s decision to keep rates unchanged in its recent meeting, the market is still pricing in a rate cut for September. This anticipation follows the recent monetary policy actions of other major central banks as well as the expectation of additional CPI data before the mid-September decision. ETFs representing various bond sectors indicate year-to-date gains in 12 out of 15 sectors, with US junk bonds (high-yield) leading at a 4.2% increase. This suggests a strategic shift in the bond market, where anticipation of policy changes is driving positive returns.

 

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Source: Investing.com


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