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ASX to rise again as US stocks hit fresh highs as UK and Japan enter technical recession

Published 16/02/2024, 09:27 am
Updated 16/02/2024, 10:00 am
© Reuters.  ASX to rise again as US stocks hit fresh highs as UK and Japan enter technical recession

The ASX200 is set for a second day of gains if ASX futures are to be believed, pointing to a 72-point or 0.9% lift in early trading.

It may be a difficult day for the Commonwealth Bank, however, as the Australian Financial Review reports the bank has been ordered to pay a $10 million fine for knowingly underpaying staff.

The news broke after close of market yesterday, which could lead to some interesting movements in the stock this morning.

US and European markets (Source:Commsec)

In the US, some weak retail sales data gave renewed hope to interest rate cuts once again, driving markets up.

Tech once again outperformed, with Tesla (NASDAQ:TSLA) rising 6.2% and Meta 2.3% while Alphabet (NASDAQ:GOOGL) lost yesterday’s gains and then some, shedding 2.2% after a report OpenAI would develop a competing web search product.

Cisco Systems (NASDAQ:CSCO) also shed 2.4% as a planned job cut failed to ease investor’s consternation, and banking institution Wells Fargo (NYSE:WFC) lost 7.2% after one of its primary regulators lifted a punishment from the 2016 fake accounts scandal.

The Dow Jones rose 0.9% or 349 points, the S&P500 hit a new record high with a 0.6% lift and the Nasdaq added 0.3% or 47 points.

In Europe, markets also gained. Renault (EPA:RENA) led auto stocks up with a 6.5% gain, the sector overall adding 2%.

Britain’s economy fell into a technical recession in the second half of 2023, with official data demonstrating a 0.3% contraction in GDP in the final quarter of 2023, and 0.1% in the previous quarter.

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Japan also entered a recession by definition despite massive tourism inflows to the country, also losing its spot as third-largest economy to Germany. The Japanese economy contracted 3.3% in the third quarter last year, and 0.4% in the final three months of 2023.

Back in the EU, the FTSE300 gained 0.7% while the UKFTSE100 climbed 0.4%.

Currencies and commodities

The Aussie and Euro were stronger against the US dollar in trade today, moving from US$1.0725 to US$1.0770 for the Euro and US$0.6483 to US$0.6520 for the Australian dollar.

The yen went the other way, falling from 149.75 yen per US dollar to 150.23 yen, and closed near 150 yen.

Oil continued its rise as the US dollar weakened, although the International Energy Agency (IEA) has warned global demand for oil appears to be waning. The forecast for 2024 has therefore been reduced from 1.24 million barrels per day to 1.22 million barrels per day.

Brent rose by US$1.26 or 1.5% to US$82.86 a barrel, US Nymex crude lifted by US$1.39 or 1.8% to US$78.03 a barrel.

Base metal prices showed mixed results; copper futures surged by 1.5% following disappointing retail sales data in the US, which contributed to a weaker dollar, while aluminium futures declined by 0.7%. Iron ore futures marginally increased by US$0.07 or 0.1% to US$129.17 a tonne.

Gold futures also saw an increase, rising by US$10.60 or 0.5% to US$2,014.90 an ounce on Thursday, with spot gold trading near US$2,004 an ounce at the close of the US market.

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