ASX 200 pointing to a higher start
NVDA down 5.5% as lower US CPI triggers rotation
S&P500 has worst day since Easter, when only Jesus rose
Aussie markets kicked off in the green on Friday morning, up 0.8% at 10.30am AEST, despite a knee jerk Wall St reply to last night’s much-better‑than‑expected US consumer inflation (CPI) data.
In New York overnight every mega-cap member of the Magnificent Seven went lower after June inflation literally screamed “cut me” to both interest rates and the US Federal Reserve.
The response on the trading floor was an en masse rotation out of overdone US mega-tech stocks. The S&P500 had its worst day since around Easter.
US growth stocks were sharply lower as investors piled into the short end of the bond market after the US CPI came in well under market expectations – on both the headline and closely watched core measures.
That’s very positive on the inflation front and the bond market instantly rallied, much of the cash sucked out of the record breaking tech heavy Nasdaq, which copped the brunt of the selling – losing 365 points, or 2%.
The S&P 500 index fell 50 points or about 0.9% with the closing bell sounding a lot like the growing conviction that the Fed will now cut in September.
Both of these endlessly butt-kicking indices finally broke a seven day win streak.
Nvidia lost more than by 5.5%
Meta Platforms crashed more than 4%.
Apple gave up 2.3%.
However, this is not necessarily bad news for Stockhead readers and other small cap fans. The Russell2000 small cap index added a hearty 3.2%.
On Friday morning, CBA reckons a 25bp rate cut in tinsel town et al is now close to fully priced for September.
It’s all supportive for the local currency too.
The AUD/USD rose to close to 0.6800 in response to the inflation data but eased to 0.6760 by the time of writing, suggesting there is resistance at these higher levels.
“Even so, fundamentals should continue to support AUD/USD this year in our view. It is also likely the MOF in Japan intervened to support the yen with a large fall in the USD/JPY around the time of time of the CPI print,” says CBA’s chief currency strategist and man on the money Joseph Capurso.
US government bond yields fell sharply.
In the EU, sharemarkets stocks rose on the optimistic inflation data and its thrill through Wall Street.
In the UK GDP returned to growth in May with an expansion of 0.4% compared to forecasts of 0.2% for the month. In London, the UK FTSE 100 index rose 29 points or 0.4%.
On the continent, the FTSEurofirst 300 index rose 11 points or 0.6%.
In Paris, the CAC40 added 0.75% on Thursday. Gains were led by Vivendi which jumped 5%.
Check it out: Canadian stocks are at an all-time high with the TSX exchange closing at a record 22557 last night.
Over the past 4 weeks, the Canada Stock Market Index gained 2.68%, and in the last 12 months, it’s up 12.35%.
Elsewhere, base metal prices were mixed on Wednesday. Copper lost 1.85%. BHP announced it was closing Nickel West due to oversupply in the global market for the EV and stainless steel metal.
On the breakfast menu, the big agri-commodity losers were Orange Juice which lost almost 7%.
Sugar lost -1.76% and Wool about-1.6% .
The winners were Cocoa (5.57%), Oats (4%) and Wheat (1.74%).
Looking ahead…
At home it’s Friday and the macro measurements take a knee – and so should you – with no data releases scheduled.
That said, in China they have Trade data for June. In the Eurozone it’s more of these monthly CPI reports.
But let the Europeans fall where they will, no time to dwell as Wall St Q2 earnings are kicking off tonight with the significant US banks like Messrs JP Morgan Chase, Wells Fargo Citigroup.
Also in the states tonight, June Producer Prices (PPI) drop as does the handy Uni of Michigan Consumer Sentiment read.
In other markets …
The Gold price jumped 1.75% to $2,414.67.
Oil prices –Brent crude oil added 0.65% to $85.89 and West Texas added 1%.
The US 10-year Treasury yield fell 7 points to 4.21% and the US 2-year Treasury yield was 12 points lower at 4.52%.
The yield on Australian 2 Year government bonds down at 4.19% while the 10 Year yield was also down at 4.34%.
The Australian dollar was at 67.40 US cents, up a smidge from its previous close of 67.39.
The iron ore price fell by 1.7% to US$108.74 a tonne.
Finally, in Cryptoland on Wednesday morning, Bitcoin and Ether fell BTC lost about 0.9%.
5 ASX small caps to watch today
In some Friday Maggie Beer Holdings (ASX:MBH) news, the CEO Kinda Grange is moving on, “to progress her career externally.”
Maggie B says Kinda has agreed to hang around to “assist in transitioning” to the new boss. Chair Sue Thomas says the Board has commenced a transition process to a new CEO and will update the market of progress.
After a massive Thursday, Augustus Minerals (ASX:AUG) has slipped into a trading halt for a cap raise. One to watch after AUG rocketed some 160% yesterday following these rock sample assays:
• 35% copper and 236 g/t silver from rock chip assays at Tiberius prospect.
• 32% copper, 3.26 g/t gold and 129 g/t silver from rock chips from the South Snowy prospect
• 10.1g/t gold from rock chips from the Justinian prospect
• 53.1 g/t silver and 5,000ppm molybdenum from rock chips from the Claudius prospect.
• 537ppm molybdenum and 47 g/t silver from rock chips from Minnie SE prospect, 1.4km SE of the existing Minnie Springs Mo-Cu porphyry drilling area.
Galan Lithium (ASX:GLN) has dropped an update at its HMW project, with its in situ lithium mining inventory continuing to build with over 2,800t LCE accumulating in ponds. Galan says the overall project completion is close to 40%, project construction continues to advance “at a pace commensurate with preserving cash”.
First production from HMW is now targeted for H2 2025, a bit of a bummer after previously flagging H1.
We love a good Tugnsten story at Stockhead. This one features Toronto-based, triple-listed Almonty Industries (ASX:AII), whose wholly-owned subsidiary Almonty Korea Tungsten Corporation has signed an MOU with Yeongwol County in South Korea to secure the location of the Sangdong Downstream Tungsten Oxide Plant.
Yeongwol is located circa 30km from the Sangdong Tungsten Mine and “will be a hub for high-tech industries utilising local mineral resources.”
The MOU states that AKTC proposes to establish a factory of about 60,000 m2 within the Yeongwol County Opportunity Development Special Zone to produce refined and smelted tungsten, and tungsten alloys. Yeongwol County says it will provide “full legal and institutional support to Almonty”.
AKTC proposes to invest some 100 billion won (~$108 million) in the construction of the downstream tungsten oxide plant, and an additional 40 billion won (~$43 million) in processing plant facility upgrades required to increase tungsten concentrate production at the Sangdong Tungsten Mine.
“As a result, Yeongwol-gun will serve as an outpost for Korea’s core industrial belt after facing a new era of regional economic development and job creation according to the mining and plant construction sectors.”
Kingsgate Consolidated (ASX:KCN) says it just keeps intersecting “significant gold” in the high potential exploration prospects near Chatree Gold Mine; B-R, Kumpee and Chalawan and a new prospective area, “Nok Kaeo” which is 13km NE of Chatree.
Final assay results returned for the remaining 62 holes (for 9,312m) of the expanded CY2024 Phase 1 reverse circulation (RC) drilling programme have successfully identified new zones of near-surface gold mineralisation across Minyari Dome where results confirm high-grade gold mineralisation along the northern edge of the main zone of GEO-01 and at several areas within the broader 700m by 500m GEO-01 prospect area, with shallow, high-grade new intersections returned.
At Stockhead, we tell it like it is. While Galan Lithium was a Stockhead advertiser at the time of writing, it did not sponsor this article.
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