On Wall Street, communication services led five of 11 S&P 500 industry groups lower. The NYSE Fang + Index was 2.5 per cent lower near 1.15pm in New York. The VIX climbed more than 5 per cent to retake 14.
Today’s agenda
Local: 8.30am – House Committee Public Hearing: Oversight of ASIC. 10am – CSR Limited AGM in Sydney.
Overseas data: US Fed releases minutes from its June meeting at 9pm; April FHFA house prices, S&P CoreLogic CS house prices; May durable goods orders, new home sales; June consumer confidence index, Richmond Fed manufacturing index
*All times AEST
Other top stories
PwC’s fire sale aims to save more than 1500 jobs Acting CEO says the plan to sell the government and related consulting business to Allegro is the ‘best opportunity for our staff to thrive and succeed’.
PwC’s public sector spin-off faces big procurement hurdles The new PwC public sector spin-off will need to resubmit its credentials for existing contracts and faces practical issues winning new work as a key procurement panel remains closed off to new entrants until late 2025.
Market highlights
ASX futures up 21 points or 0.3% to 7053 near 3.10am AEST
- AUD -0.03% to 66.78 US cents
- Bitcoin -1.5% to $US30,094 at 3.22am AEST
- On Wall St at 1.25pm: Dow +0.1% S&P -0.2% Nasdaq -0.9%
- In New York: BHP +0.5% Rio +0.9% Atlassian -1.4%
- Tesla -4.2%% Apple -0.5% Amazon -1.3% Alphabet -3%
- Meta -3.5% Microsoft -1.4% Netflix -1.5% Nvidia -4%
- Stoxx 50 +0.2% FTSE -0.1% CAC +0.3% DAX -0.1%
- Spot gold +0.1% to $US1923.88/oz at 1.13pm in New York
- Brent crude +1% to $US74.62 a barrel
- Iron ore -0.3% to $US108.85 a tonne
- 10-year yield: US 3.72% Australia 3.95% Germany 2.31%
- US prices as of 1.13pm in New York
United States
Fundstrat Global’s Tom Lee on the equities outlook: “Barring a large sell-off, the S&P 500 is up about 13 per cent year-to-date and should be up double digits by week’s end.”
Since 1950, there have been 22 instances when S&P 500 up more than 10 per cent by mid-year, leading to a median second half return of 8 per cent, for a 82 per cent win-ratio. That implies the S&P 500 will reach 4700 by year-end (inline with our target), Lee also said.
If one looks at instances when the S&P 500 was negative in the prior year (ala 2022), there are nine: the median second half return has been 12 per cent (higher), for a 89 per cent win-ratio. That implies a 4900 year-end level.
“Get the message? The base case is S&P 500 is set to rise 25 per cent this year. Yup. That is what we argued at the start of this year. And likely makes all time highs.”
Lee said there’s a “mountain of cash”, which he put at $US5.4 trillion, on the sidelines, up from $US4.7 trillion at the start of the year. His top sector is still tech, though he sees a broadening out of the rally in particular with industrials. He also sees a recovery for regional bank stocks.
Commodities
Fitch Solution’s BMI sees tough times ahead for iron-ore producers: “Over the medium-to-long term, we expect that lower prices will push production into stagnation as steel demand weakens in China.
“We forecast annual production growth to average -0.1 per cent over 2027-2032, with most producers seeing minimal increases and declines in some major suppliers such as Australia.”
BMI said: “We expect iron ore production in Australia to grow at an annual average of 0.2 per cent over 2023-2027. The significant slowdown compared to the previous five years comes from the launch of the limited new sources of supply from new projects available.
“We expect a fall in output of 5.1mn tonnes in 2027 compared to 2023 levels. We believe Australia’s seating at the lowest-end of the global iron ore cost curve will provide a healthy buffer against falling prices in the coming years. On average, the cost of producing iron ore in Australia is $US30.0/tonne, compared with $US40.0-50.0/tonne in West Africa and $US90.0/tonne in China.”
