ASX Weekly Report for 18 Mar to 22 Mar 2024
Global Markets Weekly Update
Last week was dominated by central bank meetings that confirmed the market view that interest rate cuts will be coming in the second half of 2024.
The Swiss National Bank was the first major economy to cut rates pointing to a lower inflation outlook while the Bank of England, the RBA, the Fed and the European Central Bank all met and released statements confirming that inflation would soon be falling to their target ranges. Rates were kept on hold but the language was more accommodative or ‘dovish’ than previously. The US Fed all but confirmed it would cut rates three times in the latter half of 2024.
The Bank of Japan also met but it raised rates, signalling the end of its ‘zero’ interest rate policy. The move was well telegraphed but nonetheless it was an historic moment for the Japanese market. The Nikkei Index moved above 41,000 for the first time in history before closing at 40,888, up 5.6% for the week.
The last time the Bank of Japan raised interest rates was in 2007 – before the advent of iPhones!
US shares and Eurozone shares also moved to record high levels with the $S&P 500(BK91326.US$ rising 1.63%, the $NASDAQ(NASDAQ.US$ gaining 1.80% and the $Dow Jones Industrial Average(.DJI.US$ climbing 1.97%. Europe’s Stoxx600 climbed 0.96%.
China’s sharemarket fell 0.22% along with Hong Kong falling 1.32% - despite seeing a slight improvement in the economic outlook. Industrial output rose in January and retail consumption improved in line with forecasts.
ASX Market Weekly Review
$S&P/ASX 200(.XJO.AU$ rose 1.31% and the broader All Ordinaries Index gained 1.29% as the Reserve Bank of Australia modified its previously hawkish language and decided to keep cash rates on hold at 4.35%. This was despite a positive drop in the unemployment rate from 4.1% to 3.7% in February and news that Australian immigration increased by 145,000 people in the three months to September 2023. The 2022-2023 year saw a net increase of 518,000 migrants. Immigration represents 83% of Australia’s population growth which is leading to huge pressure on housing stocks and Australia’s push to Net Zero.
The best performing sectors were Materials (+2.35%) on the back of the positive Chinese data and a slight increase in the Iron ore price (+0.94%), Real Estate Trusts (+1.88%) on the back of likely interest rate cuts later in the year, Financials (+1.45%), Industrials (+1.37%) and Energy (+1.35%).
Consumer Staples fell 0.51%, Utilities dropped 0.32% and Communications lost 0.13%.
The Australia Dollar fell 0.94% against the US Dollar closing at $US0.6517.
US 2 year bonds fell 14 basis points to 4.60%, US 10 year bonds also fell 14 bps to 4.20% as investors sought to lock in high rates while they can. Australian 2 year bonds dropped 8bps to 3.71% while Australian 10 year bonds shed 12bps to 4.02%.
Spot gold rose 0.46% to $US2167 an ounce, Iron Ore gained 0.94% to $US110.64 per tonne and West Texas Intermediate Oil gained 0.06% and Brent Crude rose 0.28% to $85.58.
Oil tried to go higher most of the week as Ukraine increased attacks on Russian oil refineries and OPEC+ continued to push cutbacks but traders are cautious about stockpiles and the outlook for the world’s leading importer, China.
In individual stock news, Pathology provider Sonic Healthcare rose 1.75% as it announced a binding agreement to acquire Swiss-based Dr Risch laboratory group for 117 million Swiss Francs.
Amcor fell 1.19% as it announced the resignation of its CEO due to ill health.
Fisher and Paykel Healthcare rose 9.68% after the company upgraded its earnings and revenue numbers.
Rare Earth hopeful Australian Strategic Minerals jumped by 35.8% after announcing a potential $US600 commitment from the US Government. The US is seeking to break China’s strategic stranglehold on the production of the critical minerals need for decarbonising its economy.
Brickworks fell 7.95% after announcing a statutory loss and some real estate impairments.
Namoi Cotton rose 21.4% as it received a takeover bid from Singapore-based Olam. Olam already owns Queensland Cotton.
This coming week Australian investors can expect to receive dividend cheques to the value of around $19 billion as $BHP Group Ltd(BHP.AU$, $Telstra Group Ltd(TLS.AU$, $Fortescue Ltd(FMG.AU$and $CommBank(CBA.AU$ among others handout their dividends from the recent half year.
Also in the coming week we will be watching the Australian February inflation numbers (Wed), US Core Inflation (Fri), Japan Industrial Production and Retail Sales (Fri).
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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