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Morning Research Notes - 23.04.25
Optimism over a potential de-escalation in the U.S.-China trade war drove Wall Street higher yesterday, reversing the previous day's losses. Commodities experienced mixed performances yesterday. Gold remained unchanged at $US3,380.94 an ounce, Brent Crude (oil) rose by 2.2% to $US67.73 a barrel, while iron ore decreased by 0.7% to $US98.65 a tonne.
Wall Street closed higher yesterday, driven by hopes of a de-escalation in the U.S.-China trade war. This followed reported comments from U.S. Treasury Secretary Scott Bessent indicating that a reduction in tariffs between the two countries could happen in the near future, boosting investor confidence. Bessent mentioned that current tariff levels are unsustainable and expects a de-escalation in the "very near future," which helped to further lift market sentiment. The Dow Jones Industrial Average rose 2.7%, the S&P 500 gained 2.5%, and the Nasdaq climbed 2.7%. Additionally, the quarterly earnings season continued, with notable performances from companies like 3M, which saw an 8% rise in stock due to strong first-quarter results, and GE Aerospace, which climbed 6% on better-than-expected earnings. However, some companies like Halliburton and Northrop Grumman faced declines due to misses on earnings.
The Australian stock market closed down yesterday, with the ASX200 slipping by 0.03%. Major sectors followed suit, with Info Tech, Health Care, and Utilities recording losses of 2.26%, 1.35%, and 0.25% respectively. In contrast, Materials and Financials managed to notch gains, rising by 0.19% and 1.23%. Major commodities had a bullish day, with aluminium, copper, zinc, and nickel all closing in the green.
After Trump announced a reduction in some of his broad-based tariffs, the equity market somewhat rebounded. However, Apple's stock still closed last week nearly 12% lower than before "Liberation Day". Apple faces pressure to diversify its manufacturing base, a costly and complex endeavour due to its reliance on China's efficient manufacturing ecosystem. The uncertainty is affecting Apple's stock valuation, necessitating a "Trump discount" to account for the administration's leverage over the company. Before the tariffs, Apple's stock traded at 29 times projected earnings, higher than other major tech stocks and more than double that of hardware makers like Samsung, Dell, and HP.
Source: Wall Street Journal
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