Market Update: 23 July 2024
Australia’s financial landscape experienced slight fluctuations this week as the ASX 200 closed 0.6% lower. As we look forward to next week’s release of the June quarter CPI data, there’s anticipation in the market, with expectations of inflation increasing from 3.6% to 3.7%. This data, alongside last week’s stronger-than-expected job growth, has sparked speculation about a potential rate hike by the Reserve Bank of Australia (RBA) in August. This week, most sectors were in decline, with Industrials and Financials making moderate gains, while Energy and Real Estate were the hardest hit.
Globally, market dynamics continue to unfold with intriguing developments across major regions. In the United States, equity markets were mixed, with the S&P 500 and Nasdaq experiencing declines of 0.8% and 2.1%, respectively, while the Dow Jones rose by 0.7%. Technology stocks faced pressure following disappointing earnings reports from giants like Tesla and Alphabet. As smaller-cap companies continued to capture investor interest, the Small Cap Russell 2000 has now outperformed the S&P 500 by approximately 1,300 basis points since the soft June CPI print. Investors are keenly observing shifts in the US yield curve, which suggests potential rate cuts by the Federal Reserve, with the market currently pricing in several reductions before the year’s end.
In Asia and Europe, market reactions reflect both regional economic shifts and global trends. The Nikkei in Japan saw a significant decline of 6.0%, marking its lowest close in about three months, as investors await the Bank of Japan’s upcoming policy meeting amid rising inflation concerns. Meanwhile, greater China and Hong Kong markets also experienced downturns, with the Shanghai Composite and Hang Seng indices dropping after the People’s Bank of China’s unexpected rate cut. In contrast, European markets displayed resilience, with the Euro Stoxx 50, EuroStoxx 600, and FTSE ending the week on a positive note, driven by mixed results in the Q2 earnings season and ongoing assessments of central bank policies. These global developments reflect a complex economic environment, underscoring the importance of staying informed and adaptable in the face of changing market conditions.
Published 30/7/2024
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