US markets rallied on Monday after US Treasury secretary Janet Yellen offered optimism on a soft landing for the US economy amidst slightly higher inflation, now 3.6% in August compared to the 3.4% forecast.
It was a good day for big tech stocks for various reasons:
Tesla (NASDAQ:TSLA) enjoyed a 10.1% bump to its stock price after Morgan Stanley (NYSE:NYSE:MS) described its Dojo supercomputer as a $600 billion potential boost to the company’s market value, consequently upgrading Tesla from "equal-weight” to "overweight".
Meta gained 3.3% on reports the social media giant is working on a new AI system with more power
Amazon (NASDAQ:AMZN) was up 3.5% and Microsoft (NASDAQ:MSFT) 1.1%, while shares of Qualcomm (NASDAQ:QCOM) lifted 3.9% after the chipmaker signed a new deal with Apple (NASDAQ:AAPL) to supply 5G chips, giving Apple a 0.7% boost – much needed considering the stock was falling the last few days after China banned iPhone for government officials.
Overall, the Dow gained 0.3% or 87 points, the S&P500 0.7% and the Nasdaq added 1.1% or 156 points.
European markets and currencies
Euro markets followed the US’s lead, closing higher on Monday with miners leading the way – up 2.4% – on higher base metal prices.
Banks were also on the up, adding 1.1% following a report the Italian Government is reconsidering the details of a controversial windfall tax on lenders.
The Euro Commission has also lowered its expectations for economic growth over the next year or so, predicting an expansion of 0.8% for 2023 (compared to 1.1%) and 1.3% in 2024 (compared to 1.6%)
The FTSEurofirst 300 gained 0.4%, and the UK index gained 0.3%.
The Aussie dollar rallied against the greenback to sit near US64.30 cents at the US close, following the Euro as it lifted to near US$1.0745 at close, while the Japanese Yen floundered, slipping to near JPY146.55.
Base metals have been on a rebound in recent days – copper futures bounced 2.4% on a higher Chinese Yuan and positive loan data, and aluminium lifted 1.1% while iron ore gained 1.1% to US$118.23 a tonne, potentially signalling an easing of China’s economic woes.
Oil and gas on the rise
Oil prices have been on a steady upward trajectory recently, although they were largely unchanged on Monday, having broken through to a 10-month high of US$90 a barrel in response to OPEC and Russian oil cuts continuing.
In Australia, a strike at Chevron’s liquified natural gas facilities is predicted to push gas costs higher. Trading volumes for natural gas have been up 47% globally on Capital.com’s trading platform, indicating a large appetite for exposure to oil and gas stocks.
The Chevron (NYSE:CVX) strike is just the latest shock to gas markets. Negotiations are ongoing, but it would appear that neither side is willing to budge, at least publicly,” Capital.com senior market analyst Kyle Rodda said.
“Chevron is taking a hard line— it isn’t clear workers know the full and global ramifications of their actions.
“We’ve already seen a lift in gas prices on the risk that 7% of the world’s supply could be disrupted. The volatility has attracted traders who are well aware of how quickly prices can spike.
“Despite the near-term risk, the strike action at Chevron Australia is unlikely to create the kind of shock we saw in 2021 and 2022, which was exacerbated by the pandemic, wild weather, and Russia’s invasion of Ukraine.
“Prices still remain below US$3, which is still lower compared to prices during the supply shocks of 2021/22 when gas prices were trading above US$9.
“On top of that, storage levels in places like Europe are much higher, with supply chains more resilient than they once were.
“Nevertheless, an increase in gas prices could cause a headache for businesses and consumers, with inflation remaining at uncomfortable levels, especially given the recent rise in oil prices.”
What about small caps?
The &P/ASX Small Ordinaries (XSO) finished 0.19% lower yesterday.
Predictive Discovery Ltd (ASX:ASX:PDI, OTC:PDIYF) is planning more resource drilling at the Bankan Gold Project after further high-grade gold results up to 40 metres at 5.64 g/t gold in drilling on the tenure.
Evolution Energy Minerals Ltd (ASX:EV1) has opted to restructure its board, seeking to focus on the development of the Chilalo Project and manage the implementation of its strategy of vertical integration.
Ionic Rare Earths Ltd (ASX:IXR, OTC:IXRRF) has partnered with automotive giant Ford, Less Common Metals Limited and British Geological Survey to create a UK-based rare earth supply chain from recycled magnets in a major deal for the company.
Novo Resources Corp (TSX:NVO, OTCQX:NSRPF) listed on the ASX with an oversubscribed $7.5 million IPO, as a new gold explorer with assets in Western Australia’s Pilbara region.
Alto Metals Ltd (ASX:AME) secured a new mining lease at the Lords Corridor recently, offering gold exploration upside for its 400,000 ounces at 1.6 g/t gold resource at Lords Camp and de-risking the project.