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Morning Research Notes - 26.09.24
Wall Street dipped overnight as investors paused to assess the Fed's potential rate outlook, with treasury yields rising amidst fears that looser financial conditions, could reignite inflation. Commodities experienced mixed performance on Wednesday: Spot gold increased by 0.2%, settling at US$2,661.64 per ounce. Brent crude fell by 2.2%, bringing its price down to US$73.49 per barrel. Iron ore saw continued its upward momentum, rising by 1.8% to US$97.40 per tonne.
The S&P 500 closed lower on Wednesday, as stocks took a breather after their recent rally, with investors assessing the Federal Reserve's rate cut outlook for 2024 and 2025. More clarity on the Fed's outlook is expected after the release of Friday's PCE (Personal Consumption Expenditures) data and Chairman Powell’s speech on Thursday. Despite the dip, the overall market remains close to record highs. Notable stock movements included; Nvidia rising 2% after CEO Jensen Huang finished selling shares, Meta Platforms climbing 0.9% following the debut of its augmented reality glasses and Flutter Entertainment jumping 5% on stock buyback plans. Conversely, Stitch Fix plunged 39% due to weaker-than-expected guidance.
The Australian markets experienced gains on Wednesday, with the ASX200 closing 0.65% higher. Positive performance was reflected across all major sectors: Materials, Financials, Info Tech, Healthcare and Utilities saw respective price gains of 0.3%, 0.67%, 0.83%, 0.64% and 0.37%. Commodities traded relatively flat, with Zinc and Nickel prices remaining unchanged, while Aluminium ended the day 1.0% lower and Copper closed 0.2% higher.
Chart of the day
Investing in popular market themes can often increase the risk of a portfolio, due to herding behaviour, overvaluation and increased competition. When many investors chase the same themes, prices can become inflated beyond their intrinsic value, creating an asset bubble. The dot-com bubble of the late 1990s is a prime example, where excitement around internet-based businesses led to unsustainable valuations. When the bubble burst, many companies failed, resulting in significant losses for investors.
Source: Livewire
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