Proactive Investors
Published Mar 11, 2024 09:55
Updated Mar 11, 2024 10:30
The morning catch up: ASX expected to pull back after last week’s record highs
Traders are expecting the ASX to pull back today as Victoria celebrates Labor Day by basking in the last of its three-day 38-degree heatwave.
ASX 200 futures are down 0.6% to 7,811.00 points.
Last week, the ASX200 finished 1.31% higher at 7,847. The index reached fresh record highs, supported by offshore equity markets and a Q4 2023 GDP print that led to further expectations the RBA will cut rates in the second half of 2024.
Of the sectors, Financial was 3.32% higher, Real Estate gained 2.61%, Health Care was up 1.47% and IT made 1.44%. Conversely, Energy lost 0.68%, Materials was down 0.65% and Consumer Staples dipped 0.29% to finish the week in the red.
The best-performing stock was Appen Ltd which gained 38.18%. Virgin Money (LON:VM) wasn’t too far behind at 34.21% to the green. Lake Resources Ltd was down 14.81%.
“This week's local economic calendar is light, with the NAB Business Confidence survey as the main highlight. Last month (January), the NAB Business Confidence index increased to 1, building on a 7-point rebound in December," IG Markets analyst Tony Sycamore said.
"Business Confidence remains subdued but is expected to rise as the focus shifts towards RBA rate cuts during the second half of 2024, and inflationary cost pressures continue to ease,”
US markets
The US markets finished lower last week on the back of a mixed jobs report.
Nvidia finally dragged. It was down 5.55% ahead of this week's US CPI report.
For the week, the Nasdaq lost 1.55%, the Dow Jones dipped 0.93% and the S&P500 was down 0.26%.
“The details of the Non-Farm payrolls report showed that the US economy added 275,000 jobs in February, beating forecasts for 200,000. However, the upside surprise was cushioned by a downward revision in job gains over the prior two months of 167,000 and a rise in the unemployment rate to 3.9% from 3.7% prior," Sycamore said.
"Average hourly earnings slowed to 0.1% MoM, which saw the annual rate ease to 4.3% YoY from 4.5%,”
“The jobs report showed enough elements of moderation to keep intact for now expectations of three Fed rate cuts this year, in line with the Fed’s dot plots. However, whether the Fed dots continue to show three rate cuts in the Fed's March SEP will likely come down to Tuesday's CPI report.
"The expectation is for headline CPI to rise by 0.4% MoM in February, which would see the annual rate remain stable at 3.1%. Core CPI is expected to rise by 0.3% MoM, which would see the annual rate cool to 3.7%. If the CPI number is much hotter than outlined above, there is a good chance that three dots could become two dots (cuts).”
What happened last week?
(Source Commsec)
European markets
Closed slightly lower on Friday. Real estate stocks climbed 2.1%, leading sectoral gains. Technology lost 1.6% after BE Semiconductor slumped 16.1% on a media report that Joint Electron Device Engineering Council lowered certain chip standards which might delay investments into hybrid bonding technology. German industrial output rose 1% in January, more than the 0.6% expected.
Currencies
Were mixed against the US dollar in European and US trade.
Commodities
Global oil prices closed 1% lower on Friday and fell even more for the week as traders remained wary of soft Chinese demand even as producer group OPEC+ extended supply cuts.
Base metal prices fell on Friday as speculators locked in profits after data showed US job growth accelerated in February.
What about small caps
Looking at the small cap market, the S&P/ASX Small Ordinaries (XSO) gained 0.63% on Friday to 3,073.70 and was up 2.08% for the week.
It has been a quiet start to the week for news flow in light of Labor Day. You can read about the following and more throughout the day.
Read more on Proactive Investors AU
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