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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.
Source: Investing.com
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