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The morning catch up: ASX to start the week flat as pullback continues

Published 08/01/2024, 09:36 am
Updated 08/01/2024, 10:00 am
© Reuters.  The morning catch up: ASX to start the week flat as pullback continues

The ASX looks flat today, with ASX 200 futures trading 3 points lower, down 0.04% as of 8:20 am AEDT.

It follows a 101 points or 1.34% dip for the week last week. The index finished at 7,489.

“Investors started the new year in risk reduction mode, locking in profits made on trades after the Fed's dovish pivot,” wrote IG Markets analyst Tony Sycamore.

The worst-performing sectors last week were IT down 5.08%, Real Estate down 3.47% and Materials, which lost 3.02%. At the other end was Energy which was 1.14% higher and Utilities up 0.19%. These were the only sectors to close higher for the week.

In Australia, this week, the key economic events will be November retail sales and the Monthly CPI indicator.

“The consensus expectation is for the Monthly CPI indicator to fall to 4.7% YoY from 4.9%. Should the trimmed mean (core) fall below 5%, it would confirm the rates market is on the right track looking for two RBA rate cuts in 2024,” Sycamore writes.

Looking globally, markets are in the middle of a pullback after the November/December streak.

The pullback will offer valuable feedback as to whether the rally has more legs to run. Questions investors are asking will selling stabilise on a calm 3-5% pullback, or will the market unravel?

What happened last week?

North America

US stocks rose slightly on Friday. The S&P 500 was up 0.18%, the Nasdaq rose by 0.09% and the Dow Jones Industrial average lifted by 0.07%. However, for the week, the Nasdaq fell more than 3%, while the S&P500 and the Dow Jones fell 1.59% and 0.60% respectively.

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Asia

Chinese shares ended lower on Friday, with the benchmark Shanghai Composite Index declining 0.85% to 2929. Hong Kong shares closed lower with the Hang Seng falling 0.66% to 16,535.

Japan's Nikkei Stock Average rose 0.27% on Friday.

Europe

In Europe, stocks fell on Friday led by the FTSE 100 falling 0.43%.

Currencies

US Dollar

  • 0.6718 - +0.31%

Euro

  • 0.6138 - +0.04%

British Pound

  • 0.5281 - +0.03%

Japanese Yen

  • 97.1920 - +0.24%

Chinese Yuan

  • 4.7604 - -0.18%

Hong Kong Dollar

  • 5.2483 - +0.35%

Commodities

  • Brent Crude (bbl) was unchanged at 78.76.
  • Gold (toz) rose +0.13% to 2,052.60.
  • Silver (toz) rose +0.85% to 23.39.
  • WTI Crude (bbl) gained +2.44% to 73.95.
  • Copper (lbs) lost -1.09% to 3.80.

What about small caps?

The S&P/ASX Small Ordinaries (XSO) finished 0.63% lower on Friday and down 3.25% for the five days.

It was a quiet week on the news front last week and that seems to have carried through to Monday morning. However, you can read about the following and more throughout the day.

  • Keep an eye out for Kali Metals Ltd (ASX:KM1) hitting the ASX board for the first time around midday today. The lithium exploration company closed its Initial Public Offering (IPO) and says it enjoyed overwhelming investor interest. It initially planned to raise $15 million but had to advance the closing date due to high demand. Significant interest from notable figures in the West Australian lithium sector and various institutional investors marked the bookbuild.
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  • Provaris Energy Ltd (ASX:PV1, OTC:GBBLF) has engaged leading classification society DNV to apply its expertise towards the review and approval of Provaris’ H2Neo carrier's proprietary hydrogen cargo containment system.
  • Sipa Resources Ltd (ASX:SRI) notes that it has received assays from the two-hole diamond drill program undertaken to test the Rim and Jumper targets at the Paterson North Project in late 2023. The assay results include some discrete zones with elevated pathfinder element anomalism, although no material copper or gold grades. Multiple other targets remain to be tested at the project and Sipa, as manager of the JV, will look to refine and prioritise these to assess next steps.
  • Read more on Proactive Investors AU

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