Market update: 17 September 2024
This week, Australian markets demonstrated a solid performance, with the ASX 200 rising by 1.1%. Materials led the way with a notable 4.2% increase, buoyed by renewed optimism around potential stimulus measures from China. Lithium stocks enjoyed a rebound from recent lows due to supply cuts, while fears of supply restrictions from Russia impacted uranium, nickel, and titanium markets positively. Oil prices also saw an uptick, supported by output disruptions in the US Gulf of Mexico. The Financials sector lagged slightly, down 0.8%, as investors took profits after a strong run of fresh peaks in the major banks.
Strong global rebound
Globally, the US markets experienced a robust comeback, with the S&P 500, Dow Jones, and Nasdaq climbing by 4.0%, 2.6%, and 6.0% respectively. Small-cap stocks particularly stood out with a 4.4% gain. The anticipation of a 50–basis point rate cut in September is increasingly shaping market expectations. August’s Core CPI data was stronger than anticipated, however not worrisome as the price of core goods fell more than expected. Next week’s Federal Open Market Committee (FOMC) meeting will be top of mind for investors as they look for greater clarity on the rate cutting cycle.
European markets reflect optimism
European markets also saw positive movement, with the Euro Stoxx 50, Euro Stoxx 600, and FTSE rising by 2.2%, 1.9%, and 1.1% respectively. The European Central Bank’s delivered an expected rate cut, citing a data-dependent approach to future monetary policy. In the UK, cooler pay growth figures have raised hopes for further rate cuts by the Bank of England later this year.
Asian markets diverge amid regional developments
In Asia, Greater China and Hong Kong markets faced a downward trend this week. The Shanghai Composite and Hang Seng Index fell by 2.2% and 0.4% respectively, as investors reduced holdings ahead of the Mid-Autumn Festival holidays. However, reports of a potential rate cut on outstanding mortgages in China lifted the mainland property index on Friday. In Hong Kong, positive expectations of a Fed rate cut and inflows following Alibaba’s inclusion in the Stock Connect program helped the Hang Seng perform relatively better than its mainland counterparts.
In contrast, Japanese stocks experienced a modest gain, with the Nikkei advancing by 0.5%. A hawkish statement from a Bank of Japan policymaker, advocating for a rate increase to at least 1% in the second half of the next fiscal year, reinforced the bank’s commitment to ongoing monetary tightening.
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