Market wraps 16th July 2024

Morning Bell 16 July

Wall Street rallied on the first trading day of the new week as investors now believe it is more likely for presidential candidate Donald Trump to reclaim the White House at the upcoming election following a failed assassination attempt of the former president over the weekend. The rally was also boosted by strong corporate results out as we near earnings season, with key banks including Goldman Sachs and BlackRock both beating profit expectations in results out overnight. The Dow Jones closed at a second consecutive session record with a rise of 0.4% on Monday, the Nasdaq also added 0.4% and the S&P500 ended the day up 0.3%.

Over in Europe, markets closed lower on Monday as investors digested some disappointing earnings results released on Monday. The STOXX 600 fell 1% as every sector ended the day in the red, while Germany’s DAX dropped 0.84%, the French CAC fell 1.19% and, in the UK, the FTSE100 ended the day down 0.85%. Shares in luxury brand Burberry plunged 16% after the company posted disappointing Q1 results including the axing of its dividend, while Swatch Group also dropped 9.8% as profits fell amid easing sales in China.

Across the Asia markets on Monday, it was a mixed session as investors assessed key economic data out in the region. China’s CSI index rose 0.11%, South Korea’s Kospi index fell 1.73%, and Japan’s Nikkei was closed for a public holiday.

China’s economic outlook took another hit yesterday with the world’s second largest economy reporting its worst pace in economic growth in five quarters with a GDP data showing expansion of 4.7%, down from the 5.3% reported in Q1 and well below economists’ expectations of a 5.1% reading. Weak domestic demand, falling yuan, persistent property downturn and trade tensions were the key drivers of the eased economic expansion. China’s retail sales for June also came in lower than expected with a 2% gain YoY compared with expectations of 3.3%.

The local market started the week with a modest gain of 0.73% to close with a fresh record of 8017.60 points with every sector ending the day in the green led by the tech sector jumping 1.4%. The broad market rally yesterday was driven by Wall Street’s record run that ended last week on a high note.

Aussie Broadband tumbled 14% on Monday after the company lowered its earnings guidance for FY25, while Lifestyle Communities tanked 18% on the back of a news report featuring residents of the company’s properties outlining alleged immoral and unethical conduct.

Star Entertainment shares lost 1% after the casino operator reported it has been forced to pause its electronic game rollout due to issues with the software.

What to watch today:

  • Ahead of Tuesday’s trading session here in Australia the SPI futures are anticipating the ASX to open the day down 0.05%
  • On the commodities front this morning, oil is trading 0.45% lower at US$81.84/barrel, gold is up 0.41% at US$2421/ounce and iron ore is flat at US$109.58/tonne.
  • The Aussie dollar is buying US$0.68, 106.92 Japanese Yen, 52.19 British Pence and NZ$1.11.

Trading Ideas:

  • Bell Potter has maintained a hold rating on Nanosonics (ASX:NAN) and have increased the price target on the healthcare equipment and services company from $3 to $3.45 following the release of a trading update out of the company yesterday. Nanosonics outlined it expects revenues at the upper end of guidance and operating expenses to growth also within the specified range of 9-11%.
  • And Trading Central has identified a bullish signal on Step One Clothing (ASX:STP) following the formation of a pattern over a period of 36-days which is roughly the same amount of time the share price may rise from the close of $1.47 to the range of $1.64 to $1.70 according to standard principles of technical analysis.