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Morning Research Notes - 01.11.24
Yesterday, the US market experienced significant declines as tech giants Meta and Microsoft led a broader market sell-off, compounded by persistent inflation worries. Major commodities had a mixed day: Iron ore increased 0.3% to $US103.80 a tonne, Brent crude climbed 0.8% to $US73.10 a barrel, and contrastingly, spot gold fell 1.7% to $US2,740.30 an ounce.
On Thursday, Wall Street saw significant declines as the S&P 500 fell 1.9%, the Dow Jones dropped 0.9%, and the NASDAQ tumbled 2.8%. This was driven by sharp drops in tech stocks, with Meta and Microsoft falling due to concerns over increased expenses and weaker guidance. Meta’s stock fell over 4% and Microsoft’s nearly 6%. Additionally, disappointing earnings reports from companies like eBay, Robinhood, Uber, and Estee Lauder contributed to the negative sentiment. Inflation data showed a slight cooling but remained high, complicating the Federal Reserve’s decision on future rate cuts.
On Thursday, the Australian stock market closed lower, with the ASX 200 declining by 0.25%. This negative trend was reflected across major indices, with the Materials, Health Care, and Utility sectors recording losses of 0.68%, 0.34%, and 0.92%, respectively. However, the Financial and Info Tech sectors managed to notch gains, rising by 0.14% and 0.52%. Major commodities had a mixed day: Aluminium and Nickel ended the day in the green, rising by 0.21% and 0.13%, whereas Copper and Zinc fell by 0.8% and 0.28%.
Chart of the day
Sahm Rule states that a recession begins if the three-month moving average of the national unemployment rate rises by 0.50 percentage points or more relative to the minimum of the three-month averages from the previous 12 months. Applying this metric to Australian data since the 1980s highlights this rule is a pretty good indicator of a weakening economy and associated interest rate cut (if not recession). Based on the August employment report via the ABS, this number currently sits at 0.49%.
Source: Livewire
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