What's Affecting Markets Today
US Tech Implosion – Albert Edward’s Concerns
Albert Edwards, a strategist at Société Générale, is skeptical about the US tech sector’s surge in 2023 and warns of a potential implosion in 2024. With 40 years of experience, he dismisses the arguments favoring the sector’s sustainability. Edwards predicts the biggest shock for 2024 could be the US IT market cap bubble bursting, leading to a broader market slump. Despite the tech sector’s rally in 2023, driven by a few dominant companies, he is wary of its overrepresentation in the US market capitalization, especially after the frenzy caused by innovations like ChatGPT.
Australian Dollar’s Rise
The Australian dollar reached a five-month peak, surpassing US68¢, influenced by expectations of US rate cuts and ahead of important US inflation data. This rise comes as the US dollar index, which compares the dollar to six major currencies, dropped to near four-month lows. The Australian dollar’s surge marks a significant recovery from its 8% drop in October, reflecting a changing economic outlook and shifting investor expectations in global currency markets.
Angola’s Departure from OPEC
Angola has decided to leave OPEC after 16 years due to disagreements over oil production quotas. This move comes as OPEC, led by Saudi Arabia, tries to manage global oil prices in the face of decreasing production capacity and increasing US output. Angola’s exit, reducing OPEC’s membership to 12 nations, initially impacted crude prices, but is not expected to significantly affect overall oil supply or OPEC’s strategies. This development highlights the challenges within OPEC in maintaining cohesion and influencing global oil markets.
ASX Stocks
ASX 200 - 7,509.5 (0.07%)
Key Highlights:
Australian shares approached a record high by midday, with the S&P/ASX 200 gaining 0.1%, driven by energy and tech sectors, and nearing its 2021 peak. The All Ordinaries index also saw a slight increase. This upward trend comes as major mining companies like Fortescue, Rio Tinto, and BHP Group make significant advances, with Fortescue reaching a new high and Rio Tinto and BHP Group approaching their record levels.
The Australian dollar gained momentum, reaching a five-month high against the US dollar, influenced by expectations of US rate cuts and upcoming US inflation data. This rise signifies a strong recovery from October’s 8% drop, as the currency now stands just 0.2% lower for the year. Ray Attrill from NAB notes this rally in the Australian dollar is driven by broader developments in global stock markets and the US dollar’s weakness.
In individual stock movements, A2B Australia surged 18% following a buyout offer from ComfortDelGro. Austal also saw a 3.2% increase after securing contracts to build vessels for the US Navy and Australian government. Conversely, Core Lithium’s shares plummeted 22% due to a review of its business strategy amid falling lithium prices. Additionally, Synlait Milk’s shares dropped nearly 6% due to expected lower net profits, impacted by increased borrowing costs and margin changes.
Leaders
BOE – Boss Energy Ltd (+6.25%)
NEU – Neuren Pharmaceuticals Ltd (+6.07%)
A4N – Alpha Hpa Ltd (+5.53%)
TUA – Tuas Ltd (+5.39%)
LYC – Lynas Rare EARTHS Ltd (+4.34%)
Laggards
CXO – Core Lithium Ltd (-19.70%)
SYA – Sayona Mining Ltd (-5.00%)
LRS – Latin Resources Ltd (-4.81%)
TLX – TELIX Pharmaceuticals Ltd (-3.32%)
HGH – Heartland Group Holdings Ltd (-2.58%)