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As of 8:30 am AEST, ASX 200 futures were up 78 points, a 0.97% increase, indicating a potential market recovery. This rise follows significant rebounds in major US benchmarks, recovering from the worst week of 2024. Market uncertainty lingers over the US Federal Reserve's next rate decision, whether it will adjust by 25 or 50 basis points in September. Meanwhile, China's producer prices continue to deflate, adding to global market concerns.
Overview of Overnight Markets
US markets closed on a positive note, recovering from recent losses that reflected fears over economic growth and mixed expectations about future rate cuts. This rebound comes after the S&P 500 experienced its toughest week in 18 months, with factors like seasonality headwinds and doubts over a 50-basis-point rate cut affecting sentiment. Currently, market estimates suggest a 27% chance of a 50 bp cut, amid concerns that growth indicators, such as weaker-than-expected August payrolls, point to further challenges.
Bond yields followed the recovery pattern, with the US 2-year yield reaching its lowest level since September 2022, while the 10-year yield dropped to its lowest point since June 2023. Commodity prices also experienced a bounce, with copper recovering after a 3.3% decline last week and WTI crude oil gaining 1% following an 8% drop last week, the lowest level since June 2023.
ASX Market Today
The ASX 200 is expected to build on the momentum seen yesterday when the index closed down just 0.32%, recovering from a session low of 1.18%. Investors are focusing on a range of corporate developments that could influence today's market movement:
- KKR is reportedly reconsidering its consortium bid for a 74.25% stake in Queensland Airport.
- Newmont Corporation (ASX:NEM) continues advanced negotiations with Greatland Gold (ASX:GGP) regarding the sale of its Havieron and Telfer project
- ResMed Inc. (ASX:RMD) saw shares tick upward after Apple (NASDAQ:AAPL) announced new sleep apnea detection features in its upcoming Watch Series 10
- Steadfast Group Ltd (ASX:SDF) rejected allegations made in an ABC news article claiming brokers misled customers.
Market Sentiment and Key Trends
Despite the positive movements overnight, investors remain cautious as the market confronts several ongoing risks, such as economic growth concerns, fluctuating rate cut expectations, and broader geopolitical challenges. After a rough start to the week, the path forward remains uncertain, with potential for brief rallies followed by additional market softening.
Commodities remain a critical area of focus, as metals such as copper and gold saw some recovery after significant sell-offs. However, overall, the sector remains under pressure, with some ETFs in areas like uranium, copper, and biotech down between 5-10% this month.
