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The morning catch up: ASX set to rise with tech stocks in focus

Published 27/05/2024, 09:45 am
© Reuters.  The morning catch up: ASX set to rise with tech stocks in focus

The ASX is set to rise today with ASX 200 futures up 47 points or 0.6% this morning.

Tech stocks will be in focus this week as the Nasdaq hit another all-time high on Friday.

The ASX200 finished 86 points (-1.11%) lower last week at 7,727, ending a four-week winning streak due to headwinds from Wall Street, hawkish Reserve Bank of Australia (RBA) meeting minutes and a pullback in commodities.

Consumer Discretionary (-4.34%), Telcos (-3.71%), Real Estate (-2.45%) and Materials (-1.49%) sectors were the main detractors. In contrast, the IT (2.25%), Utilities (+2.34%), Energy (+1.23%) and Industrial (+0.91%) sectors performed well.

Among individual stocks, the biggest losers were City Chic Collective Ltd (-15.71%), AP Eagers Ltd (-14.23%), Mayne Pharma Ltd (-13.97%) and James Hardie Ltd (-13.81%). The biggest gainers were Nuix Ltd (+28.57%), Pointsbet Ltd (+14.29%), Technology One Ltd (+12.18%) and Xero Ltd (+8.41%).

This week, key events include retail sales on Tuesday and the Monthly Consumer Price Index (CPI) indicator for April on Wednesday.

As April marks the first month of the new quarter, the Monthly CPI indicator will update around 60% of the basket, skewed towards goods rather than services. Preliminary expectations suggest the Monthly CPI indicator for April will ease to 3.3% year-over-year from 3.5%.

The rates market begins the week pricing in approximately 6 basis points (~21%) of RBA rate cuts for December.

As for the US, IG Markets analyst Tony Sycamore notes, “Last week, the Dow Jones snapped its five-week winning streak as hotter-than-expected economic data and a hawkish Fed speak pushed back expectations of Fed rate cuts.

"However, the tech-heavy Nasdaq and the S&P500 were able to lock in a fifth straight week of gains courtesy of a bumper earnings report from Nvidia, whose share price finished the week 15% higher.

"For the week the Nasdaq gained 1.41%, the S&P500 closed 0.03% higher, while the Dow Jones finished 934 points (-2.33%) lower.

“The final reading of the Michigan Consumer Sentiment Index on Friday helped the S&P500 and the Nasdaq close in positive territory after a nasty sell-off on Thursday. It showed a fall in inflation expectations to 3.3% for the year ahead, down from 3.5% in the preliminary estimates.”

What else happened last week?

(source Commsec)

European sharemarkets

Ended lower on Friday and declined for the week. Utilities led losses for a second consecutive day, down 1.3%, while insurance stocks rose by 0.5%. The German economy grew by 0.2% in the March quarter, meeting expectations.

  • The FTSEurofirst 300 index fell 0.2% on Friday and was down 0.5% for the week.
  • In London, the UK FTSE 100 index dropped 0.3%, marking its fourth straight session of losses, the longest losing streak since February.
  • The FTSE 100 index fell 1.2% for the week, affected by a 2.3% slide in British retail sales in April, compared to an expected decline of 0.5%.


Were stronger against the US dollar in European and US trade.

  • The Euro rose from US$1.0808 to US$1.0856, settling near US$1.0845 at the US close.
  • The Australian dollar increased from US65.96 cents to US66.35 cents, ending near US66.25 cents at the US close.
  • The Japanese yen strengthened from JPY157.12 per US dollar to JPY156.82, closing near JPY157.00.


Global oil prices rose about 1% on Friday but fell for the week due to concerns that strong US economic data would maintain higher interest rates, reducing fuel demand. Brent crude increased by US76 cents or 0.9% to US$82.12 a barrel.

  • US Nymex crude gained US85 cents or 1.1% to US$77.72 a barrel.
  • Over the week, Brent crude fell 2.1%, marking its longest losing streak since January 2, while Nymex crude dropped 2.8%.

Base metal prices were mixed on Friday.

  • Copper futures declined 0.8% due to worries about higher interest rates and weak demand in China, which had previously driven prices to record highs.
  • Aluminium futures rose 1.5%. For the week, copper lost 5.5% while aluminium increased 2.2%.
  • Gold futures fell by US$2.70 or 0.1% to US$2,334.50 an ounce on Friday, with spot gold trading near US$2,333 an ounce at the US close. Gold posted its worst week in five and a half months, down 3.4%.
  • Iron ore futures rose by US13 cents or 0.1% to US$117.66 a tonne on Friday, gaining 0.5% over the week due to ongoing hopes of increased demand in China amid property stimulus measures.

What's next for Australian market?

As he does every week, Wealth Within chief analyst Dale Gillham offers his insight into what to expect from the market in the coming weeks.

As the All-Ordinaries index has failed to achieve a new all-time high this week, it raises the question: have buyers exhausted their immediate efforts and, in doing so, paved the way for sellers to take charge, or are they just taking a breather?

On Friday, the All-Ordinaries index had seen a slight dip of less than half a per cent for the week and prices remained within the range set from the previous Thursday. This indicates that the market is in a phase of at least short-term accumulation. Such periods typically precede significant price movements in either direction, adding intrigue to the market's next move.

So, with a strong directional move either up or down on the horizon, there's a genuine possibility that our market may trend downwards. This is supported by the historical seasonal trend of market declines in June and the market’s inability to surpass the previous all-time high adds fuel to this.

That said, given the market's resilience this year, a significant price fall on the All-ordinaries index in June seems less likely.

A more probable scenario is for the market to reach its major yearly low between September and November. Therefore, there's still considerable room for market growth before any serious decline.

Nonetheless, if June follows its historical downturn, I'll closely monitor the 7,800 level, which has been a strong buyer support level since February. If prices breach 7,800, the potential support around 7,500 becomes pivotal.

As we are presented with two opposing potential scenarios on our market and a short window regarding market turning points, I cannot stress enough the importance of having an exit strategy in place for the stocks you are trading.

Waiting for the market to plummet before considering selling will be too late, potentially undoing all of the nice gains the market has provided this year so far. For now, it is time to wait and see what the next move holds.

What about small caps?

The S&P/ASX Small Ordinaries finished Friday 0.91% to the red to 3,010.80. For the five days, it was down 1.08%.

It has been a steady start to the morning on the news front and you can read the following and more throughout the day.

  • Polymetals Resources Ltd (ASX:POL) has entered into a strategic investment agreement with Metals Acquisition Ltd (ASX:MAC, NYSE:MTAL). MAC announced the signing of this subscription agreement, marking a significant development for both companies.MAC will invest an initial A$2.5 million in total at a price of A$0.35/share for an initial 4.31% interest in POL.
  • Corazon Mining Ltd (ASX:CZN, OTC:CRZNF) receives cash and shares from the divestment of 85% of the lithium rights for the Miriam Project to lithium-focused explorer and developer Future Battery Minerals Ltd (ASX:FBM).
  • Tempest Minerals Ltd (ASX:TEM) updated the market on the progress at the Remorse Target (NYSE:TGT). The Remorse Target is a 4-kilometre-long coincident base metal and geophysical target in the company’s Flagship Yalgoo Project. TEM has received preliminary approval for drilling at the central area of the target.
  • Lindian Resources Ltd (ASX:LIN, OTC:LINIF) has confirmed the appointment of Alwyn Vorster as chief executive officer.
  • Intra Energy Corporation Ltd (ASX:IEC) has received the Program of Works (POW) approval from DEMIRS for the Maggie Hays Hill (MHH) Project (tenement E63/2039), situated in the Lake Johnston Greenstone Belt in Western Australia.
  • Read more on Proactive Investors AU


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