What's Affecting Markets Today
Cryptocurrencies Rally After US Approves Bitcoin ETFs
Cryptocurrencies experienced a significant boost following the US approval of bitcoin exchange-traded funds (ETFs). This decision led to a rise in Bitcoin’s value, with a 1% increase to $US46,391, nearing its 10-month high. Similarly, Ethereum saw a 3.5% climb, reaching a near two-year high. The overall market capitalization of cryptocurrencies, with Bitcoin constituting over half, stands at $US1.7 trillion.
Iron Ore Extends Losses Due to Weak Demand in China
Iron ore futures have been declining for six consecutive sessions, primarily due to subdued demand from Chinese steelmakers. The most-traded iron ore contract on China’s Dalian Commodity Exchange fell by 1.43%, and the benchmark on the Singapore Exchange also saw a decrease. This downtrend reflects in steel reinforcing bar (rebar) production, which fell by 6.5% in January, indicating a reduced demand for raw materials like iron ore.
Australia’s Goods Trade Surplus Surges to $11.4 Billion
Australia witnessed a significant surge in its goods trade surplus, reaching an eight-month high of $11.4 billion in November. This increase, surpassing market forecasts, was fueled by a rise in coal exports and a decrease in car imports. Exports grew by 1.7%, driven by coal and iron ore, while imports fell by 7.9%, mainly due to a reduction in automobile imports and lower oil prices. The Australian Bureau of Statistics will now issue service export and import reports quarterly instead of monthly.
ASX Stocks
ASX 200 - 7,506 (+0.50%)
Key Highlights:
The ASX experienced gains, largely influenced by a tech rally on Wall Street and the US approval of Bitcoin ETFs. The S&P/ASX 200 and the All Ordinaries both rose by 0.5%, despite the main benchmark being down 1.1% since the start of the year. The rise was driven by sectors like technology, consumer-related stocks, and banks, which compensated for weaknesses in the mining sector.
Investors are closely watching the US consumer price data, anticipating insights into the Federal Reserve’s interest rate adjustments. The US core consumer price index is expected to show a 0.3% increase in December, suggesting a slowdown in annual inflation.
In the retail sector, companies like JB Hi-Fi, Harvey Norman, and Super Retail Group saw significant rises, fueled by expectations of a halt in rate hikes by the Reserve Bank. Major banks also showed gains, with Commonwealth Bank, Westpac, NAB, and ANZ all reporting increases.
Tech stocks followed the Nasdaq’s lead with NextDC and Megaport registering gains, while Block saw a decline. Mining giants like Rio Tinto, Fortescue, and BHP faced pressure due to falling iron ore prices.
In corporate news, CZR Resources soared on its sale announcement of Robe Mesa iron ore mine, Pinnacle Investment Management showed optimism for the latter half of fiscal 2024, and Worley faced corruption allegations. Cryptocurrencies, particularly Bitcoin and Ethereum, surged following the SEC’s approval of Bitcoin ETFs, indicating growing mainstream acceptance of digital currencies.
Leaders
SLX – SILEX Systems Ltd (+6.52%)
S32 – SOUTH32 Ltd (+5.03%)
ILU – Iluka Resources Ltd (+4.55%)
TLX – TELIX Pharmaceuticals Ltd (+3.89%)
AX1 – Accent Group Ltd (+3.88%)
Laggards
IFL – Insignia Financial Ltd (-4.42%)
HGH – Heartland Group Holdings Ltd (-3.60%)
STX – Strike Energy Ltd (-3.19%)
BFL – BSP Financial Group Ltd (-3.02%)
LTM – Arcadium Lithium Plc (-2.91%)