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Morning Research Notes - 19.09.24
On Wednesday, the US stock market experienced volatility following the Federal Reserve’s decision to implement a 50 basis point rate cut. This marks the first rate cut by the Fed since March 2020. The move broke the S&P 500’s seven-day winning streak, reflecting the market’s immediate anxiousness over the pace of potential rate adjustments. Commodities experienced weak performance. Spot gold traded flat changing 0.00%, settling at $US2558.91 per ounce. In contrast, Brent crude oil saw a decline of 1%, bringing its price down to $US72.93 per barrel. Similarly, iron ore experienced a decrease of 1.5%, with its price falling to $US90.80 per tonne.
US stocks experienced volatility on Wednesday after the Federal Reserve implemented a 50 basis point rate cut, the first since March 2020. Despite initial gains, the S&P 500 ended its seven-day winning streak, closing slightly down. The Nasdaq Composite remained flat, while the Dow Jones Industrial Average fell by 0.1%. The Fed’s decision, split 11-to-1, signals the start of a potential rate-cut cycle aimed at supporting the economy amid recessionary concerns. Notable stock movements included a rise in US Steel shares, which increased by 3.7% following an extension granted to Nippon Steel to refile its plans to purchase US Steel for $14.9 billion, and a significant jump in Intuitive Machines after winning a NASA contract.
Australian markets maintained their bullish momentum yesterday despite the ASX 200 closing 0.01% lower. Sectors experienced mixed performance: Materials, Information Technology, and Utilities sectors declined by 0.54%, 0.13%, and 0.43%, respectively. In contrast, Financials and Utilities sectors saw gains of 0.36% and 1.26%. Commodities also continued their upward trend, with Aluminium, Copper, Zinc, and Nickel recording gains of 0.58%, 0.51%, 0.17%, and 0.13%, respectively.
Chart of the day
The US Federal Reserve cut interest rates by 50 basis points on Wednesday, marking the first reduction in four years. This move, which lowers the federal funds rate to between 4.75% and 5%, aims to support the US economy. Policymakers anticipate another 50 basis points in cuts this year. Despite initial market optimism, the S&P 500 closed slightly down. Inflation has significantly decreased since its peak in 2022, but many Americans still face high costs and concerns over employment. Fed Chair Jerome Powell expressed confidence in maintaining a strong labour market and avoiding a recession, emphasising the need for careful policy adjustments.
Source: Livewire
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