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Highlights:
- ASX 200 futures signal rebound: Futures up 55 points or 0.69%, indicating the ASX 200 may end its three-day losing streak.
- Tech-led rally boosts Wall Street: S&P 500 posted its best session since June, led by gains in Tesla, Nvidia, and Alphabet.
- China cuts rates unexpectedly: China's central bank reduced key interest rates, spurring optimism across global markets.
The ASX 200 futures indicate a positive start to the trading session, with an expected rise of 55 points or 0.69%. This follows a strong overnight performance on Wall Street, where major US indices rebounded sharply. The S&P 500 registered its strongest single-day gain since June, primarily driven by a resurgence in tech stocks.
Wall Street Overview
The S&P 500 closed near its session highs, as key tech names regained momentum following last week’s steep losses. Tesla (NASDAQ:TSLA) surged 5.1%, Nvidia (NASDAQ:NVDA) advanced 4.7%, and Alphabet (NASDAQ:GOOGL) rose 2.2%. This rebound was attributed to a market correction from recent rotational headwinds, with analysts highlighting that the six largest tech firms are on track for 30% EPS growth this year compared to 5% for the rest of the index.
Goldman Sachs noted that smaller-cap and equal-weight benchmarks could continue to outperform unless upcoming Q2 results from Big Tech drive significant upward revisions in earnings forecasts for the second half of 2024 and FY25. Meanwhile, Jefferies observed that the S&P 500's weekly Relative Strength Index (RSI) reached nearly 80 last week, a rare occurrence that often signals short-term consolidation but historically precedes strong 6- and 12-month gains.
Factors Driving Market Sentiment
China’s central bank unexpectedly cut key interest rates, signaling further economic stimulus to boost growth. This move supported global markets, particularly resource-heavy sectors. Additionally, several ASX-listed companies are set to react to quarterly reports and trading updates, further driving investor focus.
Key ASX Company Developments
- DroneShield Limited (ASX:DRO): Shares fell 20.9% following Q2 revenue of $7.4 million and a revised manufacturing capacity target. The stock has declined 40% over the past five sessions amidst a challenging pipeline of $1.1 billion.
- Insignia Financial Ltd (ASX:IFL): Gained 5.0% on delivering a stronger-than-expected Q4 update.
- Iress Limited (ASX:IRE): Shares rallied 9.3% after an upward revision to its 1H24 earnings, forecasting adjusted EBITDA between $65-67 million.
- Perenti Limited (ASX:PRN): Rose 5.7% after raising FY free cash flow guidance to $180 million, well above consensus expectations of $113 million.
- South32 Limited (ASX:S32): Plummeted 12.5% after downgrading FY25 production guidance for alumina, copper, and zinc.
Broker Insights
A slew of broker updates highlighted changing outlooks for ASX-listed companies:
- DroneShield Limited (ASX:DRO): Downgraded to Hold by multiple brokers with revised price targets.
- South32 Limited (ASX:S32): Upgraded to Buy from Neutral by Citi, despite a lower target price of $3.35.
- Monash IVF Group Limited (ASX:MVF): Upgraded to Outperform by RBC Capital, with a target increase to $1.75.
- Woodside Energy Group Ltd (ASX:WDS): Downgraded to Neutral by E&P with the target unchanged at $31.50.
Market Outlook
The combination of China’s monetary easing, resilient US tech earnings prospects, and corporate updates is setting a constructive tone for the ASX 200. Resource stocks remain under scrutiny as quarterly reports continue to flow. Axel Ree is also set to make its ASX debut today, adding to investor interest.
This positive backdrop suggests the ASX 200 could end its recent losing streak, reflecting the broader recovery seen across global markets.
