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Morning Research Notes - 01.10.24
Wall Street saw significant gains on Monday, driven by investor optimism following Federal Reserve Chair Jerome Powell’s speech, which suggested potential interest rate cuts in response to slowing inflation. Commodities experienced mixed performance on Friday: Spot gold decreased by 1.1%, settling at US$2,629.89 per ounce. Brent crude fell by 0.3%, bringing its price down to US$71.77 per barrel. Iron ore continued its upward momentum, rising by 6.6% to US$108.90 per tonne.
On Monday, the stock market experienced notable gains, with the S&P 500 rising by 0.5% to close at 4,335, the Dow Jones Industrial Average gaining 150 points (0.4%) to end at 33,500, and the Nasdaq Composite increasing by 0.7% to finish at 13,450. Key sectors such as technology and consumer discretionary led the gains, with tech stocks up by 1.2% and consumer discretionary stocks rising by 0.9%. This positive market performance was primarily driven by Federal Reserve Chair Jerome Powell’s speech, where he acknowledged the recent economic data indicating a slowdown in inflation and emphasised the Fed’s readiness to adjust monetary policy to support economic growth. Powell’s comments were interpreted by investors as a signal that the Fed might consider cutting interest rates if inflation continues to moderate, boosting investor confidence and leading to gains across major indices and key sectors.
Australian markets experienced gains on Monday, with the ASX200 closing 0.70% higher. This bullish trend was evident across all major indices. Materials, Financials, Info Tech, Health Care, and Utilities all saw price gains of 1.76%, 0.37%, 0.74%, 0.39%, and 0.04%, respectively. Commodities traded relatively flat, with Zinc and Nickel prices remaining unchanged, while Aluminium ended the day 4.38% higher and Copper closed 0.45% lower.
Chart of the day
Gold stocks may present a significant opportunity in 2024’s, driven by a combination of central banks’ monetary easing and increasing recognition of gold as a hedge against inflation and global uncertainty. Despite gold hitting a new all-time high of $2,670 an ounce and gaining over 27% this year, many investors may have yet to fully embrace gold stocks. The Federal Reserve’s recent 50-basis-point rate cut, lowers the opportunity cost of holding gold, making it more attractive. Additionally, central banks’ record gold purchases, accounting for about a quarter of global demand, further fuel the rally. This environment suggests that gold mining stocks, some of which that could be undervalued compared to bullion, could offer gains.
Source: Investing.com
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