Fed rolls up its sleeves to cut. RBA done cutting. Aussie employment roars higher. Why you need to watch the themes of stocks hitting new highs
It's music to markets ears. The Fed hints it will make three rates cuts, the RBA hints it's done with rate hike, but today's Aussie employment data shows the RBA will probably keeps rates where they are this year. But there is why you need to pay attention to the themes of stocks hitting new highs.
Good news from the Fed
Overnight in the US, the S&P 500 closed at a brand new historic 5,200 point-high after the Fed signaled three cuts 25-bp rate cuts this year are likely (down from four). This is also in line with what the Fed Fund futures are pricing and what markets are thinking.
THIS IS GREAT NEWS FOR MARKETS, at a time when the economy remains somewhat strong and AI is at its anthesis in driving innovation, change, efficiency and the creation of new ways of life. Speaking of AI, these are just some of the takeaways from Nvidia's $NVIDIA(NVDA.US$conference where collaborations and ties were strengthen with big tech companies and big pharma.
As for the next catalyst for US equites? PCE and earnings.
The Fed's preferred inflation gauge, PCE is released next week and then in two weeks, markets will get first quarter corporate earnings results and earnings outlook updates.
Good news from RBA. Plus cracking employment numbers. It means the RBA can keep rates as they are. But the big banks are expecting cuts anyways.
In Australia, today received confirmation that the RBA might not need to cut rates this year. But let's see as the situation evolves. Today we learnt Australian employment is far stronger than expected with jobs surging 116.5k vs 40k estimated in February, while the unemployment rate tumbled back to 3.7% vs it falling to 4% as the market expected. This comes just days after the RBA hinted it sees no further rate hikes and removed it tightening basis from its statement. As it stands now, Australia’s big four banks see rate cuts in 2024.
ASX200 market shoots up. 160/200 stocks rally. US and rate sensitive stocks hit 52-week highs. Why you need to watch these themes
160 stocks in the ASX200 are rallying as a result of the Fed's rate cut rhetoric and the fact and the Aussie economy is in better shape that we thought.
For the investors, we need to pause and think about the type of companies that typically benefit from interest rate pauses (in Australia) and rate cuts in the US. Some of those have been hitting 52-week highs today. And you should pay attention to the themes here
- Tech stocks and consumer discretionary names: Life 360 $Life360 Inc(360.AU$. Webjet $Webjet Ltd(WEB.AU$
- Property groups and developers Centuria $Centuria Capital Group(CNI.AU$, Charter Hall $Charter Hall Group(CHC.AU$ Scentre Group $Scentre Group(SCG.AU$
- Gold miners Bellevue Gold $Bellevue Gold Ltd(BGL.AU$.For more on gold and why I believe more upside is ahead..
- Companies tied to the US; Reliance Worldwide $Reliance Worldwide Corp Ltd(RWC.AU$ (it makes 77% of revenue from the US), Biotech Telix $Telix Pharmaceuticals Ltd(TLX.AU$ (makes 97% of revenue from the US).
Here are the best performers today
Aussie dollar hits new highs. Why you'd expected the Aussie dollar to keep goin’
Aussie dollar against the US dollar moved back to two month high neighborhood as investors digest very strong Aussie jobs data and the likelihood of the Fed making rate cuts this year. So FX traders will be contending with the RBA likely leaving rates were they are (imo) vs the Fed likely cutting. So that supports a higher Aussie dollar, at a time when news out of China can only potentially get better (and not worse) which supports industrial metal demand and thus the Aussie dollar. For more on why I think industrials metal prices will move up, click here.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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Moomoo Official Market Strategist
Investment strategist. I dissect markets and share investment opportunities. I am featured on TV & radio etc
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JC7577 : That's quite a surprise
Kakakala12 : Isn't that a contradiction in terms?
Cocona33 : It's good news.
TOLKKI : Interest rate cuts go hand in hand with inflation.
Skoljil : It's our money that's being cut.
assailed : Australians are really rich.