Market wraps 6th June 2024

Morning Bell - Grady Wulff

A rally for the major tech stocks and optimistic rate cut outlook boosted the New York Stock Exchange to a green close overnight with the S&P 500 and Nasdaq advanced 1.2% and 1.96% respectively to post fresh record closes, while the Dow Jones ended the session up 0.25%. JOLTs Job Openings data for April, also released overnight, added to the improved investor sentiment as the reading came in at a decline to 8.059m jobs in April from 8.355m jobs in March which indicates further easing of the tight labour market in the US.

Tech darling Nvidia rose 5% to reach a fresh record high and a US$3tn market cap on Wednesday after the chipmaking giant unveiled new chips to start the week.

In Europe overnight markets reversed Tuesday’s losses to close higher on Wednesday ahead of the European Central Bank’s rate decision out on Thursday. The STOXX600 rose 0.84% driven by a rally for tech stocks, while mining stocks again weighed on gains with a fall of 0.5%. Germany’s DAX rose 0.93% on Wednesday, the French CAC added 0.87%, and, in the UK, the FTSE100 gained 0.18% at the closing bell.

Markets across Asia closed mixed on Wednesday as India’s Nifty 50 Index rebounded from Tuesday’s tumble to close 1.98% higher, while Japan’s Nikkei fell 0.89% and Hong Kong’s Hang Seng was little unchanged with a 0.06% decline at close.

What to watch today:

  • Locally the midweek session ended 0.41% higher as broad market gains offset weakness among commodity prices and mining stocks overnight on Tuesday. The local rally also took lead from Wall street’s gains on Tuesday and Australia’s GDP data indicating softer economic growth than economists’ anticipated in the first quarter.
  • Treasury Wine Estates rose 6.1% on Wednesday after the company reaffirmed FY24 guidance ahead of its USA investor presentation.
  • Medibank shares dipped 1.2% on Wednesday after Australia’s privacy watchdog, the AIC, announced it will take legal action against the healthcare insurer for failing to safely and securely protect the medical details of 9.7m Australians during a cyberattack experienced in 2022, with fines from the watchdog potentially topping $21.5tn.
  • The Australian economy grew at a rate of just 0.1% in Q1 which was fell below economists’ forecasts and the last quarters’ reading of 0.2% growth, indicating inflationary pressures are continuing to eat away at Australia’s economic stability and expansion. The 0.1% expansion reported in Q1 was the softest growth rate in 6 quarters and driven by subdued domestic demand, and fixed investment falling further.
  • Investors will likely react to the release of Australia’s trade balance data out today at 11:30am Eastern time with the expectation of a slight rise in Australia’s trade surplus from March’s $5.024bn to $5.50bn indicating a rebound in exports compared to imports where exports have been declining since November.
  • Ahead of Thursday’s trading session the SPI futures are expecting the ASX to open the second last trading session of the week up 0.54% tracking Wall Street’s record-closing rally overnight.
  • On the commodities front this morning, oil has recovered some ground to trade 1.4% higher at US$74.28/barrel, gold is up 1.14% at US$2355/ounce and iron ore is down 2.19% at US$107.69/tonne.
  • 1 Aussie dollar is buying 66 US cents, 103.77 Japanese yen, 51.97 British pence and 1 New Zealand dollar and 7 cents.

Trading Idea:

  • Bell Potter has increased the rating on Infomedia (ASX:IFM) from a hold to a buy and have increased the 12-month price target on the leading provider of software solutions to the automotive industry after the company presented twice last week indicating this financial year is tracking to plan and the outlook is perhaps better than Bell Potter expected.