The ASX is expected to have one of the times of its life today, opening with a green day.
The ASX-200 is looking at near all-time highs, with ASX 200 futures trading 16 points higher, up 0.19%, as of 8:30 am AEST.
Last week, the ASX200 finished 86 points (1.10%) higher at 8,099, falling just five points short of its record high of 8,148 from early August. The strongest sectors last week were Materials (+4.17%), Real Estate (+4.10%), Energy (+1.86%) and Utilities (+1.80%). The most sluggish sectors were Financials (-0.79%), Telcos (-0.16%), Health Care (+0.10%) and Consumer Discretionary (+0.69%).
At a stock level, Appen Ltd (+43.52%), Pointsbet Ltd (+33.33%), Mineral Resources Ltd (ASX:MIN) (+25.06%) and Deep Yellow Ltd (ASX:DYL) (+21.81%) all performed well.
In contrast, City ChicLtd (-11.11%), Adairs Ltd (-10.80%), Johns Lyng Ltd (-10.63%), and DroneShield Ltd (ASX:DRO, OTC:DRSHF) (-10.61%) were the main drags.
“Thursday's Labour Force report for August is the main event on this week's economic calendar. Last month (which looked at July), the Australian economy added 58,200 jobs, stronger than the 25,000 the market expected," IG Markets analyst Tony Sycamore said.
"The unemployment rate increased to 4.2% in July, from 4.1% to the highest since November 2021, as the participation rate surged to a record high of 67.1% from 66.9%.
"The July jobs report confirmed that the labour market remains tight and cooling more gradually than many had expected.
“This month (which looks at August), the Australian economy is expected to add 30,000 jobs and the unemployment rate to remain at 4.2%. Ahead of the data, the Australian interest rates market is pricing in 20bp of RBA rate cuts before year-end with a cumulative 84bp of rate cuts priced by May 2025.”
US markets bolstered by rate cut hopes
US equities ended the week on a strong note, driven by expectations of a 50-basis-point interest rate cut at the upcoming Federal Open Market Committee (FOMC) meeting and a rebound in the Michigan Consumer Sentiment Index to its highest level since May.
Over the week, the Nasdaq surged 5.9%, while the S&P 500 and Dow Jones Industrial Average gained 4% and 2.6%, respectively.
On Friday, the University of Michigan Consumer Sentiment Index rose for the second consecutive month, reaching 69 in September, marking the highest level since May. Simultaneously, the probability of a 50bp rate cut at this week’s FOMC meeting climbed to 50%.
This shift was influenced by an article quoting former New York Federal Reserve President William Dudley, who argued there is "a strong case for 50" regarding the Fed's decision. Former Fed economist Claudia Sahm echoed this sentiment, citing progress in inflation control and a softening labour market as justifications for a larger cut.
These comments followed a report on Thursday indicating that policymakers were deliberating between a 25bp or 50bp cut.
“As a side note, this week’s September 18 FOMC meeting, will be seventeen years to the day that the Fed cut rates by 50bp in 2007. In 2007, there were approximately 446 days between the Fed's last hike and its first rate cut. This time around, there will be approximately 419 days between the Fed's first cut and its last hike on July 26th, 2023,” Sycamore said.
Europe closed higher
European sharemarkets closed higher on Friday as investors continued to digest the European Central Bank’s decision to cut rates. Retail stocks led gains, up 1.9%, while autos added 1.7%.
- The continent-wide FTSEurofirst 300 index gained 0.7% and was up 1.8% for the week.
- In London, the UK FTSE 100 index lifted 0.4%, posting a weekly gain of 1.1%.
Currencies and commodities
Currencies
Currencies displayed mixed performance against the US dollar during European and US trading sessions.
- The Euro declined from US$1.1100 to US$1.1071, hovering around US$1.1075 by the US market close.
- The Australian dollar slipped from US$0.6725 to US$0.6691, ending near US$0.6705.
- The Japanese yen strengthened from 141.40 yen per US dollar to JPY140.35 before settling at JPY140.80 by the close.
Commodities
Global oil prices fell on Friday as crude production resumed in the US Gulf of Mexico following Hurricane Francine, and a rise in the US rig count was reported.
- Brent crude dropped by US$0.36, or 0.5%, to US$71.61 per barrel.
- The US Nymex crude price fell by US$0.32, or 0.5%, to US$68.65 per barrel.
- Despite the decline, Brent rose 0.8% over the week, with Nymex gaining 1.4%.
Base metal prices surged on Friday, supported by a weaker US dollar.
- Copper futures climbed 1%.
- Aluminium futures increased 1.9%.
For the week, copper gained 4%, marking its best performance since July, and aluminium rose 5.4%.
- Gold futures surged US$30.10, or 1.2%, to reach a record US$2,610.70 an ounce, fuelled by optimism around potential US Federal Reserve rate cuts. Spot gold was trading near US$2,576 an ounce by the close, with bullion rising 3.4% for the week.
- Iron ore futures fell by US$0.80, or 0.9%, to US$92.26 per tonne on Friday. However, they logged a weekly gain of 0.7%, driven by expectations of Chinese stimulus and a recovery in steel demand amid concerns over China’s economic outlook.
On the small cap scene
The S&P/ASX Small Ordinaries ) XSO finished 1.17% higher to 3,001.10. Over the five trading days last week, the index gained 3.14%.
It has been quiet for news flow thus far this morning, however you can read about the following and more throughout the day.