19 Jul 2024
Assassination attempt rocks markets
Markets
- Local and global equity markets were mixed this week with trade tensions hitting technology stocks, slightly dovish comments from the US Fed, and increasing odds that Donald Trump would win the US presidential election in November following a failed assassination attempt.
- Market pricing is now showing a 94% chance that the US central bank will cut interest rates in September.
- Investors are apparently growing increasingly concerned that technology mega-capitalisation companies are spending too much on A.I.
- Analysts are expecting the largest 500 listed US companies to report second quarter earnings growth of more than 9%. If correct, it could market the biggest year on year growth since the end of 2021.
- In local stock news, the big four banks continued their surge with CBA hitting another record high with others hitting post GFC highs.
- Lifestyle Communities shares plunged to a near four-year low after an ABC program aired a critical story about the retirement community operator, with residents accusing the company of immoral and unethical conduct. The company subsequently defended its transparency.
- Rio Tinto shares fell during the week after the company forecast decreased copper and alumina production this calendar year. The company also confirmed the development of its $17.2 billion iron ore deposit in Guinea as it received approval to commence production.
- Gold prices rose strongly this week assisting locally listed gold miners with Newmont hitting an all-time high.
Economics
- The Australian jobs market grew more than expected in June, with employment growing by 50,200, coming in well ahead of expectations and above the prior month’s increased growth. The participation rose whilst the unemployment rate rose slightly to 4.1%.
- US producer prices rose 0.2% in June to push the annual growth rate up to 2.6%, ahead of expectations. The equivalent core measure (excluding volatile items) was flat in June, resulting in the annual rate falling to 3.1%.
- A key US consumer sentiment reading fell in June to an eight-month low.
- The US central bank chair noted the last three inflation readings do provide some confidence that inflation is heading back towards the bank’s target.
- A key US manufacturing index fell in July, contracting for the eighth straight month, and remaining in contractionary territory.
- US retail sales in June were unchanged from the previous month, showing consumers remained resilient. Economists had expected a decline, while spending in May was revised higher.
- US car repossessions shot higher in the first half of the year, up 23% versus the same period last year. Clear that plenty of US households are struggling under the weight of higher rates and cost of living.
- Other US data was all a little stronger with industrial production, housing starts, and building permits all beating expectations.
- The European central bank left rates on hold at their July meeting, following their June cut, saying it doesn’t know when it will be able to cut rates again as it awaits further economic data.
- Japan’s exports and imports grew less than expected in June, with local economic activity remaining subdued and sluggish demand from the country’s biggest trading partners. The news follows recent data showing persistent weakness in the Japanese economy.
- Chinese retail sales and June quarter economic growth both disappointed, showing government measures haven’t been as effective in boosting spending and broader economic activity. The world’s second biggest economy saw 4.7% growth in the quarter, down from 5.3% in the previous quarter, and below expectations.
- China’s new home prices fell at the fastest rate in nine years in June, sliding 4.5% from a year earlier, whilst eclipsing the 3.9% fall in May.
Politics
- Former US President Trump survived an assassination attempt at a rally at which he was presenting.
- US presidential hopeful Donald Trump announced Ohio senator JD Vance as his running mate. The pick wasn’t overly surprising, but it does provide consistency with Trump’s policy platform given their close alignment. Vance is fairly new to politics at just 39 years of age, previously a sharp critic of Trump, and is a lawyer, author, and US marine veteran.
- A US district judge has thrown out the prosecution’s case against Donald Trump for mishandling sensitive documents.
- The Biden administration has told allies it is considering using the most severe trade restrictions available if western companies continue giving China access to advanced semiconductor technology.
- The top two Democrats in the US congress have apparently privately told President Biden it would be better for the country and the party if he ended his re-election campaign, with Biden also conceding he would give up the race if a doctor told him he had a problem.
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