Proactive Investors
Published Apr 10, 2024 09:35
Updated Apr 10, 2024 10:00
The morning catch up: ASX to open higher; gold hits new record high
The ASX is set to open higher this morning following late strength on Wall Street overnight. The ASX futures are up 24 points, or 0.3% near 9am AEDT.
The gold price set a new record high overnight of US$2,365.09 an ounce, as the precious metal continues to go from strength to strength.
Gold has seen strong buying momentum ahead of uncertainty around US inflation data and the Federal Reserve’s take on interest rates from its meeting minutes, along with heightened geopolitical risks.
US interest rates could rise
The boss of JPMorgan Chase (NYSE:JPM), one of the world's biggest banks, has warned interest rates in the US could reach 8% as a range of "persistent inflationary pressures" weigh on the economy.
CEO Jamie Dimon said the bank was prepared for "a very broad range of interest rates, from 2% to 8% or even more" in the US. Interest rates in the US are now in the range of 5.25% and 5.5%, and speculation is that the Federal Reserve will move to cut interest rates later this year.
While US inflation is moderating and the US economy remains "resilient", Dimon said, "the economy is being fueled by large amounts of government deficit spending and past stimulus".
"There is also a growing need for increased spending as we continue transitioning to a greener economy, restructuring global supply chains, boosting military expenditure and battling rising healthcare costs."
However, former Federal Reserve Bank of St Louis president James Bullard said overnight that three interest rate cuts remained likely this year. This prompted US government bond yields to decline on Tuesday.
What happened overnight?
(Source Commsec)
US markets
US sharemarkets were mixed on Tuesday, with traders positioning for key US inflation data that will help shape the interest rate outlook.
Moderna rose 6.2% after the drugmaker's individualised cancer vaccine showed promise in an early-stage trial. Google-parent Alphabet (NASDAQ:GOOGL) gained 1.1%, pushing the company closer toward the US$2 trillion market cap threshold after it unveiled a host of updates to its artificial intelligence offerings.
Cisco Systems (NASDAQ:CSCO) added 3.7% after Morgan Stanley (NYSE:NYSE:MS) placed an overweight rating on the stock.
But chip giant Nvidia dipped 2% as rival Intel (NASDAQ:INTC) unveiled a new version of its artificial intelligence chip.
Boeing (NYSE:BA) slid 1.9% on a news report the US Federal Aviation Administration is investigating whistleblower claims about safety issues with the 787 Dreamliner.
European markets
European sharemarkets fell on Tuesday. Benchmark indexes in Germany, France and Italy lost between 0.9% and 1.3%.
A gauge of European aerospace and defence stocks slumped 3.7%, logging its steepest one-day slide in over a year.
Traders turned nervous about the sector's record-breaking run fuelled by rising military spending after Russia's invasion of Ukraine, with analysts noting potentially stretched valuations. Defence-related stocks like SAAB, Leonardo, Rheinmetall and Thales were down between 4.9% and 9.8%.
Eurozone bank shares dropped 1% after an ECB survey showed lenders lowered the bar on first-quarter mortgage approvals but demand for credit kept falling as borrowing costs remained high in a stagnant economy.
Currencies
Currencies were mixed against the US dollar in European and US trade.
Commodities
Global oil prices fell for a second day on Tuesday, as talks for a ceasefire in Gaza continued but losses were limited as Egyptian and Qatari mediators met resistance in their search to find a way out of the war.
The Brent crude price fell by US96 cents or 1.1% to US$89.42 a barrel.
And the US Nymex crude price slid US$1.20 or 1.4% to US$85.23 a barrel.
Base metal prices rose on Tuesday.
The gold futures price rose by US$11.40 or 0.5% to US$2,362.40 an ounce on Tuesday. Spot gold was trading near US$2,353 an ounce at the US close after hitting a record high of $2,365.09, fuelled by buying momentum and geopolitical risks.
Iron ore futures lifted US$1.65 or 1.6% to US$104.33 a tonne on Tuesday, underpinned by mounting hopes of improving demand for the key steelmaking ingredient in top consumer China in the coming weeks.
What’s on?
In Australia, building activity data is scheduled. The Reserve Bank of New Zealand and Bank of Canada both hand down interest rate decisions.
In the US, the consumer price index (CPI) is released with the Federal Reserve's (FOMC) March 19-20 meeting minutes.
On the small cap front
The S&P ASX Small Ordinaries ended up 0.13% yesterday, while the ASX 200 gained 0.45%.
You can read more about the following throughout the day.
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