Investment Ideas From the Edge of the Bell Curve
The Australian stock market closed higher today as US traders extended bets that interest rates cuts were coming sooner rather than later this year.
Wall Street had a broad move higher on Friday, although it was another strong showing for the Russell 2000 as hedge funds and traders appeared to rotate into smaller cap stocks.
We’ll have to see if the trend continues this week, but for now, it was enough to spur our own ASX 200 to cross 8,000 for the first time to close today up +0.73% at 8,017.6.
Since reaching the 7000 mark in April 2021, the ASX has taken over three years to gain another 1000 points.
Technology stocks lead the way, gaining +1.39%, followed closely by Discretionary gaining +1.37%.
It was a risk-on day with WiseTech, gaining 2.8% to reach $97.63, and Xero, up 1.72% to $142.56 in tech.
The materials sector also saw a positive day for the mega-caps. Fortescue Metals gained 1.9% to $22.50, while BHP climbed 0.88% to $43.75. Rising iron ore prices supported these gains, with Singapore futures trading up to $US108.60 per tonne.
In broader economic news, China reported its slowest economic growth in five quarters.
Second-quarter GDP expanded by 4.7% year-over-year, falling short of the 5.1% consensus estimate by economists.
This weakness adds to pressure on Beijing to bolster economic confidence as a key policy meeting known as the third plenum commenced today.
Shares of Lifestyle Communities [ASX:LIC] saw a sharp decline of around 17% in response to an ABC news report today.
The report held allegations from residents accusing the company of unethical and immoral practices that included predatory lending behaviour.
As of this afternoon, the land lease company’s stock was trading at $10.41 per share.
In an ASX announcement, Lifestyle Communities acknowledged the report but firmly denied the accusations made by customers, saying the company ‘had always taken pride in transparency provided throughout the sales process.’
The allegations will now go through the Victorian Civil and Administrative Tribunal (VCAT) to decide the matter.
China’s economy faced further hurdles in the second quarter, with growth slowing to its weakest pace in over a year.
The National Bureau of Statistics reported today that GDP grew by 4.7%, falling short of economists’ projections of 5.1%.
This deceleration comes at a crucial time, coinciding with the commencement of the Third Plenum, a major policy meeting among China’s top leaders.
The twice-a-decade gathering, which goes from today until Thursday, now faces added pressure to address waning economic momentum and bolster market confidence.
Despite the second-quarter setback, China’s overall growth for the year’s first half stands at 5%, which is Beijing’s annual target.
However, the recent slowdown highlights the challenges of maintaining this pace amid global trade slowdowns and domestic pressures.
As the Beijing leaders convene, all eyes will be on potential measures to stimulate growth, something they have been fairly reserved with so far.
The coming days may prove critical in shaping China’s economic trajectory for the remainder of the year and beyond.
For Australian trade its significant, especially for the major Iron ore traders.
Here is a good update by Westpac head researcher Robert Rennie on what he saw ahead for iron ore this year.
In response to recent revelations of criminal infiltration in the construction industry, Victorian Premier Jacinta Allan has announced plans to request federal intervention in reviewing and potentially terminating all Victorian Construction, Forestry, Maritime, Mining and Energy Union (CFMEU) enterprise bargaining agreements.
The move follows a major exposé, which uncovered connections between underworld figures, outlaw motorcycle gangs, and significant construction projects in Victoria and New South Wales.
This investigation prompted the sudden resignation of union leader John Setka.
During a press conference today, Premier Allan talked about changes she’s seeking in the industry, saying:
‘We’re exploring options to strengthen our anti-bikie laws,’ she stated.
‘Our aim is to empower law enforcement and the judiciary to more effectively prevent certain individuals from associating with one another.’
Allan didn’t mince words when addressing the scandal:
‘Unions are meant to protect workers. However, what we’ve witnessed isn’t unionism—it’s blatant self-serving thuggery.’
‘This corrupt culture must be eradicated completely, the way forward is clear.’
The Australian stock market surged past 8000 points for the first time, driven by widespread gains and optimism about potential aggressive rate cuts by the US Federal Reserve.
Around 2pm, the ASX 200 fell back slightly from this mornings highs. The Index is currently up +0.58% to 8005.3, with all sectors showing positive gains.
This followed strong performances on Wall Street, where the S&P 500 set another record high and the Dow Jones surpassed 40,000 as investors increased bets on US rate cuts.
Tech stocks led the rally on the ASX today, with Wisetech Global rising 2.42% and Xero gaining 1.09%. The materials sector also performed well, as Fortescue Metals climbed 2%, Rio Tinto its fairly flat at 0.1%, and BHP grew 0.9%. These gains were supported by rising iron ore prices, with Singapore futures up +1.3% to US$109.40 per tonne.
Major movements were seen by Droneshield, up +7.7%, while Lifestyle Communities is down -15.27%, while Aussie Broadband is down -14.3% after releasing softer guidance for FY25.
Lundin Mining Corp. has initiated early discussions with BHP regarding a potential joint bid for Filo Corp, a copper mining company.
This strategic move could address Lundin’s funding needs for its neighbouring Josemaria project.
The proposal involves acquiring Filo’s shareholders and merging the Filo del Sol copper project, located on the Argentina-Chile border, with Lundin’s Josemaria operation.
This combination could ease Lundin’s financing while offering BHP growth opportunities in copper production that its been hunting since the failed bid on Anglo American earlier this year.
The Lundin family owns 32% of Filo, with BHP holding nearly 6%. Filo’s shares surged to 12% following the news. However, the talks are still in the early stages, and there is no guarantee that a bid will actually emerge from them.
This potential deal aligns with the broader trend of major mining companies expanding their copper operations, anticipating increased demand driven by clean power and data centre growth.
Aussie Broadband [ASX:ABB] is down by nearly -16% in trading this morning after posting its latest trading update and FY25 guidance.
The company posted that its FY24 EBITDA is expected to be at the top end of the upgraded range of $116-121 million; however, it seems investors were more concerned about growth.
As of the end of June, the company had around 684,000 broadband customers, but its growth had flattened in the last quarter.
As a response, the company announced an aggressively positioned new brand called Buddy Telco, which offered significantly cheaper broadband than its major competitors.
Buddy Telco will charge $75 a fortnight, compared to Aussie Broadband’s original $89 package and other competitors, who offer similar deals between $80 and $105 per month.
Due to this heavy discounting, the company lowered its FY25 guidance from $135-145 million to $125-135 million.
It also provided capex guidance of $55-60 million, which is $8 million less than FY24.
Good morning. Charlie here,
The ASX is set for another positive day, with the ASX 200 opening up +0.86% and passing 8,000 as traders continue to raise bets that interest rate cuts are coming from the Fed in September.
Indeed, traders now often invoke the ‘goldilocks scenario‘, believing that the US economy will tackle inflation without triggering a recession.
Beyond interest rates, we’ve seen markets push towards the smaller caps on Wall Street, with the Russell 2000 once again leading the indices.
This week’s economic focus centers on China’s macroeconomic landscape, with June quarter GDP figures due around 12:00pm (AEST) today.
Accompanying this are June’s economic activity indicators, including industrial production, fixed asset investment, and retail sales.
Analysts predict a slowdown in Chinese GDP growth from 5.3% to 5% annually, with industrial production and retail sales also expected to show cooling trends.
However, the spotlight may be on China’s Third Plenum (Monday to Thursday), which could unveil new stimulus measures to reinvigorate the nation’s struggling economy.
Name | Value | % Chg | |
---|---|---|---|
Major Indices | |||
S&P 500 | 5,615 | +0.55% | |
Dow Jones | 40,000 | +0.62% | |
NASDAQ Comp | 18,398 | +0.63% | |
Russell 2000 | 2,148 | +1.09% | |
Country Indices | |||
UK | 8,252 | +0.36% | |
Germany | 18,748 | +1.15% | |
Japan | 41,190 | -2.45% | |
Hong Kong | 18,293 | +2.59% | |
Euro | 5,043 | +1.34% |
Name | Value | % Chg | |
---|---|---|---|
Commodities (USD) | |||
Gold | 2,411 | -0.16% | |
Silver | 31.28 | -0.63% | |
Iron Ore | 107.80 | -0.20% | |
Copper | 4.5709 | -0.36% | |
WTI Oil | 82.29 | +0.10% | |
Currency | |||
![]() | AUD/USD | 67.69¢ | -0.03% |
Cryptocurrency | |||
![]() | Bitcoin (USD) | 60,975 | +3.00% |
Ethereum (USD) | 3,254 | +2.49% |
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Investment ideas from the edge of the bell curve.
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