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The morning catch up: ASX to follow overseas markets higher

Published 22/08/2024, 09:34 am
© Reuters.  The morning catch up: ASX to follow overseas markets higher
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The local market is expected to open higher this morning based on ASX SPI 200 Futures trading up 28 points (0.35%) to 7,993.

US markets finished higher and closed near record highs overnight with the S&P 500 within 1% of all-time highs as investors look forward to interest rates being cut next month.

The US Federal Reserve’s July FOMC minutes revealed that “several” officials saw the case for a 25 basis point rate cut in July, although the vast majority saw a September cut as likely appropriate.

Federal Reserve governor Michelle Bowman remains cautious about any shift in the US central bank's policy because of what she sees as continued upside risks for inflation.

Bowman said inflation should continue to fall under the current stance of policy, and if inflation continues to fall sustainably toward the Fed's 2% target, "it will become appropriate to gradually lower the federal funds rate to prevent monetary policy from becoming overly restrictive on economic activity and employment."

What’s on today?

The purchasing managers' indexes (PMIs) are scheduled to be released today.

Earnings results are due from ARN Media, Autosports, Beacon Lighting, Eagers Automotive, Emeco, G8 Education, Insignia Financial, IPH, Medibank, Megaport, Northern Star Resources (ASX:NST), PointsBet, Qube, Regis Resources, Sonic Healthcare, Stockland, Super Retail Group, Telix Pharmaceuticals and Whitehaven Coal (ASX:WHC).

JB Hi-Fi and Suncorp trade ex-dividend.

Overseas markets

US sharemarkets advanced on Wednesday amid range-bound trading after investors parsed a steep downward revision in US payrolls and the release of the minutes from the most recent meeting of the US Federal Reserve cemented expectations for a September interest rate cut.

The Dow Jones index rose by 55.5 points or 0.1%, the S&P 500 index gained 0.4% and the Nasdaq index added 102 points or 0.6%.

  • Target (NYSE:TGT) raised its 2024 profit forecast and posted its first quarterly increase in same-store sales in more than a year, sending the retailer's stock surging 11.2%.
  • TJX (NYSE:TJX) rose 6.1% after the discount retailer lifted its annual profit forecast.
  • Macy's (NYSE:M) lowered its annual net sales forecast, sending shares of the department store chain sliding 12.9%.
  • Banks underperformed with shares of Citigroup and Wells Fargo (NYSE:WFC) down by around 1.2%.
  • American Express (NYSE:AXP) shares fell 2.7% after BofA Global Research cut the recommendation on the stock to "neutral" from "buy" due to more muted consumer spending.

In US economic data, the Bureau of Labor Statistics (BLS) revised down net payroll job gains by 818,000 to 2.1 million for the 12 months to March 2024, the most since 2009.

US government bond yields fell after revised US latest policy meeting reinforced wagers on interest-rate cuts on inflation and increases in the unemployment rate had provided a plausible case for reducing the target range 25 basis points at minutes from the Fed's July 30-31 meeting said.

Tonight, US data on initial jobless claims and existing home sales are scheduled with S&P Global PMIs and the Kansas City Fed manufacturing index. The Jackson Hole Economic Symposium begins.

European sharemarkets closed higher as investors awaited the minutes of the US Federal Reserve's July meeting to gauge the direction of global monetary policy. Automobiles led sectoral gains with a 1.4% advance, rising for the seventh straight day, while basic resources gained 0.9%.

Currencies

Currencies were stronger against the US dollar in European and US trade.

  • The Euro rose from US$1.1103 to US$1.1173 and was near US$1.1150 at the US close.
  • The Aussie dollar lifted from US67.31 cents to US67.60 cents and was near US67.45 cents at the US close.
  • The Japanese yen rose from 146.36 yen per US dollar to JPY144.46 and was near JPY145.25 at the US close.

Commodities

Global oil prices settled down by US$1 a barrel on Wednesday after US job data was revised significantly lower. Crude inventories fell by 4.6 million barrels to 426 million barrels last week, exceeding analysts' expectations for a 2.7 million-barrel draw.

  • The Brent crude price shed US$1.15 or 1.5% to US$76.05 a barrel.
  • The US Nymex crude price slid US$1.24 or 1.7% to US$71.93 a barrel.

Base metal prices were mixed on Wednesday.

  • Copper futures gained 0.8% but gains were capped as stockpiles in London Metal Exchange warehouses hit a 5-year high.
  • Aluminium futures fell 0.4% as investors booked profit after an 8-session rally.

The gold futures price fell US$3.10 or 0.1% to US$2,547.50 an ounce on Wednesday. Spot gold was trading near US$2,512 an ounce at the US close.

Iron ore futures rose US39 cents or 0.4% to US$98.38 a tonne as supportive property measures in China revived hopes of improved demand in the coming months.

What’s happening in small caps?

Cobre Ltd (ASX:CBE) has completed field acquisition of 62 kilometres of active 2D reflection seismic survey and overlapping 100 square kilometres of passive seismic survey, on the Kitlanya West Copper Project in the Kalahari Copper Belt, Botswana.

FireFly Metals Ltd (ASX:FFM) has identified multiple compelling targets for further exploration with strong potential to grow the existing resource, in addition to its current drill program, at its Green Bay Copper-Gold Project in Newfoundland, Canada.

Strickland Metals Ltd (ASX:STK) has returned a massive intercept of 308.4 metres grading 1.9 g/t gold equivalent from diamond drilling at its 100%-owned Rogozna Gold and Base Metals Project in Serbia.

Novo Resources Corp (TSX:NVO, OTCQX:NSRPF, ASX:NVO). reports significant assay results from a relogging and infill sampling program across 11 previously under-sampled, historic drill holes, within priority target corridors at the Belltopper Gold Project in Victoria.

AuKing Mining Ltd (ASX:AKN) has provided details of its exploration plans for the balance of the year for its now 100%-owned Myoff Creek niobium/rare earth elements project in British Colombia, Canada.

Read more on Proactive Investors AU

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