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China Gloom Halts ASX Rally
Equity Espresso
June 17, 2024 • Estimated Reading Time: 10 minutes
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Good Evening,
Welcome to Equity Espresso’s Daily Market Recap.
The Aussie market started the day positively, but an afternoon lull saw equities finish in the red, as the ASX 200 index lost 24.0 pts. or 0.31% to close at 7,700.30. Disappointingly, Chinese industrial and housing data weighed down markets after a swath of economic data from the world's second-largest economy. More on that later.
It was a real mixed bag from a sector standpoint; Technology (-1.50%) and Energy (-1.49%) stocks saw the largest falls, with the latter due to falling oil prices. Wisetech Global (-4.09%) and NextDC (-1.75%) saw some of the sharper falls in the tech. sector. Uranium and coal stocks plunged, with Yancoal (-3.37%), Paladin Energy (-4.88%), Boss Energy (-3.14%) and Energy Resources Australia (-4.76%) just some of the most impacted companies.
Defensive sectors were the best performers with Telco. (+0.68%) and Health Care (+0.38%) rising the most. Telstra (+1.43%) led the Telco. sector higher, while Cochlear (+1.17%) and Pro Medicus (+1.62%) led the way for the healthcare stocks.
It's a busy week for economic data. The Reserve Bank of Australia (RBA) meets tomorrow, and its expected interest rates will remain on hold at 4.35%. Tomorrow also sees May U.S. Core Retail sales data released, which is expected to rise 0.2%. Later in the week, the U.S. releases home sales data and initial jobless claims.
In company news:
Tabcorp (+0.76%) shares finished higher after it announced the appointment of former Australian Football League boss Gillon McLachlan as chief executive.
Integral Diagnostics (-4.33%) announced it plans to merge Capitol Health (+10.20%) in a proposed deal that values the latter company at $413 million.
Bapcor (-2.20%) shares fell after it announced George Saoud as its new Chief Financial Officer, who has been acting in the role since mid-March. Bapcor also said it had refinanced $200 million of debt facilities, lifting it to $300 million and extending the maturity date to 2028-2029.
ASX Indices | ASX Sector Performance |
Wall Street
The U.S. market continues to march to a new all-time high as the NASDAQ (+0.1%) recorded a fifth straight record close on Friday, thanks to gains from Adobe and other technology companies. The S&P 500 (-0.04%) recorded the slightest of falls, while the Dow Jones (-0.2%) also finished lower.
Communication Services (+0.56%) was the best performer of the major sectors, followed by Technology (+0.51%), which rose thanks to a lift in Adobe’s (+14.51%) share price.
Adobe reported better-than-expected quarterly earnings with strong growth across its Creative Cloud, Document Cloud and Experience Cloud and its advancements in artificial intelligence.
Earnings Per Share: $4.48 vs. estimates of $4.39
Revenue: $5.31 billion vs. estimates of $5.29 billion
Luxury retailer RH (-17.08%) saw its share price plunge after reporting losses of ($0.40) per share, higher than ($0.12) per share expected by analysts. The company said it expects business conditions to remain challenging until interest rates ease and the housing market begins to rebound,
U.S. Indices | Fear & Greed Index |
S&P500 Sector Performance
Economic Data
Australian Job Ads declined 2.1% month-on-month in May 2024, improving slightly from a 2.3% drop in April but remaining negative for the fourth consecutive month.
U.S. Consumer Sentiment fell for the third straight month to 65.6 in June, missing forecasts of 72 and down from 69.1 in May. The reading was the lowest mark since November last year.
U.S. Import Prices fell by 0.4% from the previous month during May, the first price decline of the year following a 0.9% rise in April.
China's Industrial Production expanded by 5.6% year-over-year in May, well below market expectations of a 6.0% rise following a 6.7% increase in April.
China Retail Sales grew 3.7 year-on-year in May, beating forecasts of 3.0% and an improvement from the 15-month low of a 2.3% rise in April.
China’s New Home prices decreased by 3.9% year-on-year in May 2024, falling further from a 3.1% drop in April, marking the 11th consecutive period of declining home prices.
The Bank of Japan (BoJ) maintained its key short-term interest rate at around 0% to 0.1% at its June meeting in line with expectations.
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🌎️ Around The Globe
Chinese firms have formally applied for an anti-dumping probe into pork imports from the European Union, escalating tensions after the EU imposed anti-subsidy duties on Chinese-made electric vehicles.
Nvidia has unveiled Nemotron-4 340B, an open-source pipeline for generating synthetic data to help developers create high-quality datasets for training large language models for commercial purposes.
OpenAI CEO Sam Altman revealed that the company is considering becoming a for-profit benefit corporation, potentially facilitating an IPO and granting Altman a stake in the company.
Tesla shareholders vote to reinstate CEO Elon Musk's previous $56B pay package and move Tesla's incorporation from Delaware to Texas.
U.K. retailers have filed a $1.3 billion class action lawsuit against Amazon, claiming it undercuts third-party sellers by releasing and promoting cheaper versions of their most popular products.
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*1-year, 3-year and 5-year returns are calculated as of 31 May 2024.
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