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Morning Research Notes - 06.09.24
Amid fresh economic concerns, the S&P 500 closed lower on Thursday, with mixed employment data raising recessionary fears amongst many investors. Commodities experienced declines on Thursday: spot gold increased by 0.7% to $2,494.17 per ounce, Brent crude fell by 0.1% to $72.60 a barrel and iron ore dropped by 1.2% to $91.45 a tonne.
Mixed employment data drove the S&P 500 lower on Thursday, as economic concerns were raised ahead of Friday's nonfarm payrolls report. The Dow Jones Industrial Average fell by 219 points (0.50%), while both the S&P 500 and Nasdaq Composite dropped by 0.3%. Private payrolls increased by only 99,000 in August, missing expectations - the weakest private payroll number seen since January 2021. This data led to increased speculation of a more aggressive monetary policy response from the Fed, including the potential for a 50 basis points rate cut in September.
The Australian markets closed on a positive note yesterday, with the ASX 200 rising by 0.4%. Most indices also ended higher, with Materials, Financials, and Information Technology posting gains of 0.46%, 0.99%, and 2.31%, respectively. However, Healthcare and Utilities saw losses of 0.1% and 1.58%. Commodities continued their bearish streak, with Aluminium, Zinc, and Nickel declining by 0.06%, 1.68%, and 1.62%. Copper was the only major commodity to end in the green, with a growth of 0.96%.
Chart of the day
Despite a relatively disappointing earning season in August, Australian equities have continued to climb in price. The lack of forecasted earnings growth has created significant price-to-earnings (PE) expansion in the ASX 200. Investors are optimistic about the potential for the RBA to cut interest rates in the near term, although persistent inflation may delay these cuts. This environment suggests that Aussie large caps may be overvalued.
Source: Livewire
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