Market wraps 10th July 2024

Morning Bell 10 July

Wall Street closed mixed across the major averages again on Tuesday with the S&P 500 notching its 36th record close for the year and the Nasdaq also posted a record close, but the Dow Jones ended the day lower. Tuesday’s rally was due to investors welcoming dovish comments out of Fed chair Jerome Powell at his semi-annual testimony on Monetary Policy. Powell said keeping interest rates elevated for too long risks economic downside through weakened economic activity and employment. The S&P 500 rose 0.07% on Tuesday to a record 5,576.98, the Nasdaq added 0.14% to close at 18,429.29 and the Dow Jones ended the session down 0.13% at 39,291.97. Apple shares closed at a 6th straight record high of $228.68 on Tuesday with shares in the tech giant up 20.3% over the last month as investor optimism grows for the company’s integration of AI into iPhones that was announced last month.

Over in Europe Markets closed lower on Tuesday as political uncertainty in France and corporate updates in the region weighed on investor sentiment. The STOXX 600 fell 0.99% as retail stocks led losses with a 1.65% decline, while Germany’s DAX fell 1.28%, the French CAC lost 1.56% and, in the UK, the FTSE100 ended the day down 0.66%. The French market was hit the hardest on Tuesday as investors continue to fear the implications of a hung parliament and potential period of prolonged political uncertainty following the left-wing New Popular Front winning the largest number of seats in the final round of voting, meaning a coalition government is on the cards which will make legislation and reforms harder to pass.

Shares in drug maker Novo Nordisk fell 1.9% on Tuesday after an analysis by the JAMA Internal Medicine Journal indicated Eli Lilly’s rival weight loss treatment led to greater weight loss than Novo’s Wegovy.

Across the Asia markets on Tuesday it was a green run led by Japan’s Nikkei soaring 1.96%, while South Korea’s Kospi Index rose 0.34%, Hong Kong’s Hang Seng climbed 0.1% and China’s CSI advanced 1.12%. Chinese EV giant BYD shares rose 3.11% on Tuesday after the company is set to invest $1bn in Turkey to open a plant with annual capacity of 150,000 vehicles.

The local market recovered from the recent sell-off to close 0.86% higher yesterday driven by positive sentiment out of the US on Monday with the S&P 500 and Nasdaq soaring to record highs. Every sector closed Tuesday’s session in positive territory locally led by telecom stocks as Telstra rose 2% on the announcement of price increases to key product lines. Bapcor (ASX:BAP) shares rose 0.5% on Tuesday after the car parts seller rejected a $1.83 billion takeover offer from Bain Capital on the grounds of not representing fair value of the company.

Westpac Consumer Confidence data for July declined 1.1% from a rise of 1.7% in June as investors assess the recent inflation reading above expectations and key inflation drivers remaining sticky including house price index, wages growth, retail sales growth, and a lower-than-expected unemployment rate. With the consensus feeling higher for longer out of the RBA and the fact Michele Bullock didn’t rule out a rate hike in the recent meeting, investors are bracing for prolonged cost-of-living pressures.

NAB Business confidence data for June out yesterday also showed a significant improvement in business sentiment with a rise to 4 points following a decline to 3 points in May and well above economists’ expectations for June which was for a decline to minus 5 points. Business conditions data on the other hand fell 2pts to 4 index points for June driven by declines in employment and profitability indices.

What to watch today:

  • Ahead of the midweek session here in Australia the SPI futures are anticipating the ASX to open the day down 0.52% despite the records set overnight on Wall St.
  • On the commodities front this morning oil is trading 0.9% lower at US$81.6 per barrel, gold is up 0.14% at US$2364.96 an ounce, and iron ore is down 1.16% at US$110.02 per tonne.
  • AU$1.00 is buying US$0.67, 108.72 Japanese Yen, 52.60 British Pence and NZ$1.10.

Trading Ideas:

  • Bell Potter has increased the 12-month price target on Genusplus Group (ASX:GNP) from $2.20 to $2.40 and maintain a buy rating on the mining and utilities services provider following a positive start to the financial year. GNP has been awarded a major contract by Western Power for a term of 5-years and is expected to generate $50m in its first year as well as the HumeLink East project construction being a major earnings catalyst for GNP over the coming financial years.
  • Trading Central has identified a bullish signal on Regis Healthcare (ASX:REG) following the formation of a pattern over a period of 12-days which is roughly the same amount of time the share price may rise from the close of $4.28 to the range of $4.85 to $5.00 according to standard principles of technical analysis.