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Morning Research Notes - 02.10.24
The US stock market closed lower on Tuesday, driven by investor concerns over escalating Middle East tensions and cautious comments from Fed Chair Jerome Powell regarding future rate cuts. Yesterday, commodities showed mixed performance. Spot gold rose by 1.1% to $2,664.03 per ounce, while Brent crude increased by 2.5% to $73.52 per barrel. In contrast, iron ore fell by 1.7% to $107.90 per tonne.
Wall Street experienced declines overnight. The S&P 500 fell 1%, the Dow Jones Industrial Average dropped 0.4% and the Nasdaq Composite declined 1.5%. Concerns over escalating conflict in the Middle East were fueled after Iran launched hypersonic missiles at Israel. Defence stocks rose amidst the action. Additionally, Fed Chair Jerome Powell reined in expectations of another significant rate cut, stating that the committee does not feel ‘like it’s in a hurry to cut rates quickly’ and that the process of lowering the fed funds rate will ‘play out over time.’ Investors interpreted these comments as a cautious approach to rate cuts. Lastly, notable movements in individual stocks included CVS Health, which saw its stock fall on reports of a potential breakup of its divisions, and Boeing, which is considering a stock sale.
The Australian markets finished on a bearish note on Tuesday, with the ASX200 falling 0.74%. Major indices showed mixed performance. Materials and Financials ended in the red, with declines of 2.29% and 1.19%, respectively. In contrast, Information Technology, Health Care and Utilities posted gains of 0.44%, 1.12% and 0.92%, respectively. Commodities continued their bullish trend, with Aluminium, Zinc, and Nickel rising by 0.92%, 1.07%, and 1.85%. Conversely, copper prices fell by 0.27%.
Chart of the day
Chinese iron ore production faces challenges due to the low ore grade of its domestic reserves, requiring more energy and processing to extract usable iron content. This results in higher processing costs in comparison to higher-quality iron ore from international suppliers. As a result, China heavily relies on imports, primarily from Australia and Brazil, keeping its economy reliant on foreign shipping and supply chains.
Source: Investing.com
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