AUS
NZ
UK
CA
USA
IND
Highlights:
- ASX 200 futures indicate a positive opening with a rise of 50 points, driven by a strong overnight performance in US markets and an uptick in commodity prices.
- The US core CPI came in hotter-than-expected, yet markets rebounded sharply, led by tech stocks like Nvidia and Broadcom, despite initial weakness.
- Lithium stocks rallied significantly due to a suspension of operations in China, and Putin's export restrictions have boosted uranium and nickel stocks.
The ASX 200 futures are showing a promising rise of 50 points, up 0.62% as of 8:25 am AEST, signaling a stronger start for the Australian market. This follows a remarkable rebound in major US indices, despite initial sharp losses. The S&P 500 and Nasdaq reversed early declines, fueled by an unexpected uptick in US core inflation, largely driven by stubborn shelter prices. Several commodities also saw gains after Russian President Vladimir Putin hinted at possible export restrictions, contributing to the market's resilience.
Overnight Market Recap
US markets witnessed a strong recovery, with major benchmarks closing at session highs after a weak start. The US core Consumer Price Index (CPI) came in slightly above forecasts, challenging hopes for a larger interest rate cut by the Federal Reserve in September. Expectations for a 50-basis-point cut have now dropped from 44% to 15%. Despite the higher inflation reading, the overall market remained optimistic, and this could explain the significant recovery in stocks after the weak opening.
Tech stocks were the standout performers during the session. Nvidia surged 8.1%, while Broadcom rose 6.7%, leading the sector’s impressive gains. This sectoral strength contributed heavily to the broader market's rebound, as defensive and cyclical sectors like real estate, healthcare, financials, and energy underperformed.
ASX Today: Key Developments
In local markets, the ASX 200 is expected to open higher, reflecting the strong overnight lead from US markets and a rise in commodity prices. Several key developments are on the radar for today's session:
- Australian Clinical Labs (ASX:ACL): Major shareholder Crescent Capital has exited its full 30.1% position at $3.20 per share.
- National Storage REIT (ASX:NSR): Launched a $300 million note to repay existing debt.
- REA Group (ASX:REA): Rightmove's board rejected a proposal from REA Group, deeming it opportunistic and undervaluing the company’s future prospects.
- The Star Entertainment Group (ASX:SGR): Star’s lenders have provided a $150 million lifeline as the casino operator faces financial challenges.
Key Themes to Watch
1. Lithium Stocks Rally: The suspension of lithium operations in China by CATL has fueled a significant rally in local lithium stocks, with gains between 5-15%. UBS estimates that this move could reduce China's lithium output by approximately 8%, potentially driving prices higher by 11-23% through the remainder of 2024. Investors will be watching closely to see if this rally sustains beyond the typical short-term bounce observed in previous lithium stock surges.
2. Impact of Putin's Export Restrictions: Putin's comments about potential export limits have already impacted the markets, with the Uranium Miners ETF rising by 5.1% and the Nickel Miners ETF up by 3.4%. This could provide a lift for local uranium and nickel producers, sectors that are also highly shorted.
3. Tech Sector Outperformance: The tech sector was the strongest performer on Wall Street, rising 3.2%, compared to the broader market’s 1.0% gain. This contrasts sharply with defensive sectors, which saw declines across real estate, healthcare, financials, staples, and energy.
