ASX News LIVE | ASX Bounces, Real Estate and Uranium Stocks Rally

The ASX 200 closed at a record high of 7699.4 points, up 1.47%. The market hit its top around 2pm at 7703.6 and gave back a few points before close.

Investors were hopeful of a clear pathway to a soft landing in the US and positive signs from our own inflation numbers at lining up an easier start to the year for the economy.

Strong results from Meta overnight were also part of the mix as the tech giant saw gains of over 16% in after-hours trading as the company announced its maiden dividend.

The Big Four closed the sessions up over 1% as they dodged the concerns of the larger banks in the US and Japan with exposure to US commercial real estate.

“The Australian banks don’t have that exposure,” commented Sean Sequeira to AFR, chief investment officer at Australian Eagle Asset Management.

 

“But the US banks underperformed last night again. Australian commercial real estate has held up relatively well compared to the US where some of the buildings are down 30 to 40 per cent in valuation.”

Of the 11 sectors 10 were up today, with only Utilities down -0.41%. The top performer was Real Estate, up 3.27%, led by Goodman Group, which was up 6.29%.

The top individual performer on the ASX 200 today was Pinnacle Investments, which gained 9.1% after its hotly awaited earnings came out after close yesterday. Earnings showed the company topped $100 billion in funds under management, while its profits were flat for the half.

Other notable moves today were seen in the Uranium sector, with Boss Energy (7.6%), Paladin Energy (6.2%), and Deep Yellow (+13.13%) all making sizable gains as the price of Uranium rallied from a recent drop.

Here is another great chart from IFM’s Alex Joiner.

As we look to the RBA’s decision next week on Interest rates, its important to see the shifts in pricing since mid-2023.

A lot has changed in the market since that time. Inflation has come under control and has dropped significantly since that time.

Here are the monthly figures for inflation in Australia (Note these are more volatile than the standard annual):

• Dec-22 8.4%
• Jan-23 7.5%
• Feb-23 6.8%
• Mar-23 6.3%
• Apr-23 6.7%
• May-23 5.5%
• Jun-23 5.4%
• Jul-23 4.9%
• Aug-23 5.2%
• Sep-23 5.6%
• Oct-23 4.9%
• Nov-23 4.3%
• Dec-23 3.4%

That is an impressive fall but still above the target, so what’s next?

Well, expectations of cuts have come thick and fast at the start of the year but so far Central Banks have kept a united front in saying they don’t anticipate cutting until the second half of the year at least.

That remains to be seen. While the RBA’s next meeting is more likely than not a hold call, the March decisions is ‘still live‘. Thats according to Luci Ellis, Chief Economist and former Assistant Governor of the Reserve Bank.

Next week the #RBA will get the first opportunity of the year to push back on or reinforce market expectations of rate cutes for 2024. I suspect it will be relatively cautious and need to see more disinflationary progress before materially altering its bias. pic.twitter.com/WHgg81hWpj

— Alex Joiner 🇦🇺 (@IFM_Economist) February 2, 2024

Even as Jerome Powell says rate cuts are ‘unlikely,’ the market remains unrelentingly bullish on cuts coming sooner than the rhetoric suggests.

Is the market expecting some movement here earlier than Mr Powell has previously said? Many hope and feverishly await a sign.

According to Nick Timiraos of the Wall Street Journal, Jerome Powell is scheduled to do a 60-minute interview that will be released this Sunday.

Either the Market expects a signal from this, or the treasury drop is a sign of a flight to quality.

Another development

Yesterday, we saw the unexpected collapse of NY Community Bankcorp’s share price, which scared some market participants.

The 38% plunge of the regional bank was blamed on a note from the bank, which blamed its surprise loss and dividend cut this quarter on ‘troubled assets‘ on its books, these assets were linked to commercial real estate.

The contagion of fear and losses spread today to Japanese Bank Aozora, which faced a 20% drop in its share price, which was also blamed on US commercial real estate.

Bloomberg called this a ‘$560 billion property warning’ as commercial real estate loans have started to feel the pressure from the high-interest rates.

Approximately 29% of small banks’ assets are tied up with commercial real estate, and the developments have caused kneejerk reactions in the market.

JP Morgan’s Jay Barry commented today, saying:

‘Combined with what we think is an overreaction to the regional bank developments as well as the risks around tomorrow’s employment report, these factors present upside risks to yields.’

Source: Bloomberg

Fancy yourself a pizza? Me neither.

Apparently neither do Asian markets, with Dominoes share price under pressure since the company withdrew guidance for FY24 after citing poor sales in Asia.

Sales in the Asian market were down 8.9% for the six months leading up to December.

The company said it was changing tack, saying:

‘Domino’s is now focusing on increasing weekly orders and franchisee margins, based on its successes in ANZ and Germany, and aims to apply similar strategies across all markets.’

So, does the recent downturn present a buying opportunity?

Editorial Director Greg Canavan dives deeper into Domino’s and explains why he thinks that it’s a share worth missing despite its cheaper price tag.

Read more below.

Dump Domino’s: Why the rational investor should steer clear

The ASX 200 is up by 1.07% to 7,669.3 at midday.

Uranium players made a big move as the price rallied after a smaller correction, while asset manager Pinnacle jumped 9.12% after building its assets under management to above $100 billion in its December report.

Ten of the 11 sectors are up, with only Utilities down -0.49%. At midday, the biggest gainer was Real Estate, up 2.31%, as large-cap Goodman Group gained 4.03%.

Technology stocks are also showing a strong bounce today, with Wisetech and Xero up around 2%.

Everyone and their dog has been complaining about supermarket prices. And for good reason, prices have consistently moved above inflation to the point where the ACCC has opened an inquiry into the prices of the big supermarket chains.

The investigation officially opened on January 25th and is expected to be released in 2025, with an interim report to the government later this year.

Whether that was enough to spook the big players or simply the bite of inflation is lessening is up for debate.

Regardless, thankfully, we are seeing the first signs of prices easing.

Here are the latest numbers from Economist Alex Joiner over at IFM.

PPI data for Q4 (should) foreshadow further disinflation in supermarket grocery prices for consumers (in the CPI).
A positive for the inflation outlook and shoppers – noting again price levels rarely fall much on average (so still expensive). pic.twitter.com/eS6KqJSaTz

— Alex Joiner 🇦🇺 (@IFM_Economist) February 2, 2024

The ASX rally today is well and truly carried by real estate and uranium today. While the Big Four banks and mining giants are up today, the real movement has been seen in Uranium stocks.

The price of Uranium dipped, but traders are still betting on structural deficits to support the price longer term.

Source: TradingEconomics

Stocks on the move in uranium this morning are:

Boss Energy [ASX:BOE] up 7.51%

Paladin Energy [ASX:PDN] up 6.20%

Deep Yellow [ASX:DYL] up 15%

Good morning. Charlie here

The ASX 200 opened up +0.76% to 7,645.8 as markets showed a strong recovery from yesterday’s Fed-induced falls.

Oil prices fell sharply overnight as lacklustre China data combined with hopes of a Gaza ceasefire progressed.

Overnight, the Bank of England kept rates on hold and gave its first clear signals of intended cuts when inflation falls further.

In stocks, Meta announced its first dividend in its earnings and saw its sales jump 25% in the fourth quarter. Expenses were also down 8% after its massive run of layoffs in 2023. Shares are up by 14.16%.

Wall Street: Dow +0.97%, Nasdaq +1.30%, S&P 500 +1.25%.

Overseas: FTSE -0.11%, STOXX -0.21%, Nikkei -0.76%, SSE -0.64%

The Aussie dollar gained +0.11% to US 65.74 cents.

US 10-year bond yields fell -3bps to 3.88%.

Australian 10-year bond yields fell -4bps to 3.97%.

Gold rose +0.77% to US$2,055.64. Silver rose +1.11% to US$23.16.

Bitcoin rose +1.02% to US$43,035, while Ethereum rose 0.56% to US$2,298.

Oil Brent fell -3.54% to US$78.82, while WTI Crude fell -2.23% to US$73.98.

Iron ore rose +1.1% to US$131.20 a tonne.