Last Night's Market Recap
S&P 500 - Heatmap
Overnight – Equities mixed as rotation out of Tech resumes
Stocks were mixed overnight as cyclical stocks including financials were back in favor amid a rotation out from tech ahead of a widely expected Federal Reserve cut next month.
All three major U.S. stock indexes jumped after the release of Powell’s prepared remarks, with megacaps Nvidia, Apple and Tesla providing the most muscle. Small caps and regional banks were outperformers, rising 3.2% and 4.9%, respectively.
Tech started the week on the backfoot as investors rotated out of growth sectors of the market, with Nvidia down 1% ahead of its quarterly results due this week. Apple was slightly higher as anticipation grows about the iPhone maker’s upcoming product launch event due Sept. 9, when many expect it to unveil new iPhones and Apple Watch models. Adding to the fall in chip stocks, meanwhile, Micron Technology fell more than 3% after Needham cut its price target on the stock to $140 from $150, citing concerns over demand.
In China tech news, PDD Holdings fell 28% after reporting second-quarter revenue that fell short of analyst estimates. The fall in tech comes as cyclical sectors including financials, which hit 52-week highs on Monday, rallied on expectations that these cohort of stocks are likely to significantly benefit from rate cuts.
This week the data-dependent Fed will have a raft of economic indicators to consider ahead of its September rate decision, including the Commerce Department’s revised second-quarter GDP and its broad-ranging Personal Consumption Expenditures report, which includes the Fed’s preferred inflation yardstick, the PCE price index. The inflation data will be closely watched though recent remarks by Fed policymakers have indicated that the Fed’s focus has shifted toward labour market risks and that inflation is close enough to target to facilitate cutting rates starting next month.
Fed Chair Jerome Powell said Friday that “the time has come” to lower the Fed funds target rate, and “the upside risks of inflation have diminished.” The remarks appeared to all but guarantee a rate cut
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Commodities & FX
The Day Ahead
ASX SPI 8041 (+0.01%)
The rotation into cyclicals and a bounce in Iron ore should suit the ASX today, expect the market to grind higher over the course of the day
BHP has posted an underlying net profit of $US13.7 billion for the 2024 financial year, beating estimates of $US13.5 billion.
The miner’s revenue increased 3 per cent on the prior year to $US55.7 billion, as a result of higher realised prices across iron ore and copper, where sales volumes also increased 3 per cent and 5 per cent respectively.
The miner declared a final dividend of US74¢ a share, equating to a 53 per cent payout ratio.
Yesterdays Key Earnings Results:
