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Morning Research Notes - 27.03.25
US markets experienced a downturn yesterday as disappointing economic data and escalating tariff worries weighed heavily on investor sentiment. Commodities had a bullish run - Gold remained steady at $US3020.13 an ounce. Brent (oil) had a positive day, climbing by 1.3% to $US73.93 a barrel. Iron ore also saw an increase, rising by 0.8% to $US102.40 a tonne.
Wall Street closed lower on Wednesday, with the S&P 500 falling 1%, the Dow Jones Industrial Average dropping 90 points (0.2%) and the Nasdaq falling 1.9%. Economic data released on Wednesday showed a 0.3% drop in non-defence capital goods orders excluding aircraft for February, following a 0.9% rise in January. This unexpected decline, coupled with looming tariff concerns, suggests the potential for an economic slowdown, discouraging businesses from major investment. The market is also eyeing upcoming GDP and PCE data for further signals over the direction of the US economy. Tariff worries grew as President Trump hinted at new auto import tariffs, further impacting market sentiment. Big tech stocks, particularly Nvidia (-3.5%) and Tesla (-2.8%), led the decline amidst trade uncertainties and concerns over Chinese demand, contributing to the market's downturn.
On Wednesday, the Australian market closed higher, with the ASX200 rising by 0.71%. Major sectors, including Materials, Financials, Info Tech, and Utilities, all ended in positive territory, rising 0.71%, 1.08%, 0.15%, and 0.47%, respectively. In contrast, Healthcare closed down, falling 0.53%. Major commodities had a mixed day, with Aluminium and Nickel closing in the red, dropping 1.23% and 0.69%, respectively. Contrastingly, Copper and Zinc closed higher, gaining 0.04% and 0.02%.
Chart of the day
Soaring metals prices and China's pro-growth pivot are making investors reconsider mining stocks. The European basic resources index has dropped over 40% since 2022, presenting a potential opportunity. JPMorgan strategists have upgraded miners to overweight, citing improving sentiment on Chinese equities. Factors like a weakening dollar, low metal inventories in China, and US tariff concerns are driving up commodity prices, especially copper. Additionally, European manufacturing PMIs are rising, Germany is planning infrastructure and defense stimulus, and China targets 5% GDP growth this year.
Source: Bloomerg, JPMorgan, ChartOfTheDay
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