United States
US stocks moved higher on Monday as investors digested the market implications of the unsuccessful assassination attempt on Republican presidential candidate Trump. The Dow rose 0.53% to a new record high of 40,211. The S&P 500 was up 0.28% and the Nasdaq gained an additional 0.4% to 18,472.
Monday’s trade saw moves into equities that would benefit from Republican administration policies. These policies of expected lower taxes and higher tariffs were the theme in so called “Trump trade.” The broader based Russel 2000 continued its outperformance of last week to be up 1.8% hitting best levels since 2022. Longer term interest rates were up five basis points to 4.23%.
Goldman Sachs was up 2.6% after releasing second quarter earnings which were better than expected. This led to a gain in the bank sector which was up 1.4% on the days. Tesla was also higher on the day by 1.8%. Political uncertainty saw the volatility index increase overnight with the VIX index up to 13.16% to the highest level of the last 2 weeks.
Fed Chairman Powell also gave a speech where he said that data released in the second quarter gave the Fed confidence that inflation was lower and that a hard landing for the economy was unlikely.
Europe
European markets began the week lower across the board. The Euro Stoxx fell 1.0% to 518.73. The FTSE was down 0.85% to 8,182. Leading the decline was luxury retailer Burberry which lost 14% on a profit warning and the suspension of dividends. Mining stocks were also lower with Anglo American and Glencore both lower by 1.3%. The CAC was down 1.19% to close at 7,632 and the DAX was lower by 157 points to finish at 18,590. The consumer sector was lower on the news around Burberry and due to disappointing updates from Swatch on their sales, particularly out of China.
Australia
The Australian market is expected to open slightly lower; the overnight ASX 200 futures fell 9 points the equivalent of 0.11%. BHP was also lower in US down over 1%. AUDUSD is trading 0.6761 as markets open on Tuesday morning.
The Australian market rallied strongly to close at a record high and above the 8,000-index level for the first time ever. The ASX 200 was up 0.70% to close at 8,017.6 a gain of 58 points. All sectors were higher with Consumer discretionary and Information technology being the strongest with a rise of 1.38%. Real estate shares continued to rally up 0.9% on the day to mark a 5% rally over the last 5 days. Mirvac was again strong up 3.48%. Job advertisement company Seek increased 4% on the day.
GDP from of China came in lower than expected at 4.7% year on year versus missing the expected result of 5.10%. In Asian trade Hong Kong shares were lower and the Japanese Nikkei was sharply off from its record highs of last week to end the session down 2.45%.
The increase in the broad market in the US with the expectations of lower rates has added optimism to Australian traders that further gains are on the cards here.
Commodities
Bitcoin surged to $US63,800 on Monday an increase of over 5% as traders rushed back into the cryptocurrency on expectations of a greater chance of a new Trump presidency and tailwinds for risk assets.
Oil slipped slightly with WTI down 0.36% to 81.91 and Bent crude fell 18c to 84.85.
Iron ore was trading at 107.70 down a little over 1% from the close in Singapore on Monday. Copper was lower by $71 to close at $9,806. A fall of 0.70%. Gold advanced, pushed forward by a perception it will benefit from a Republican victory to be up 0.45%, closing at $US2,4227 and silver was slightly lower at $US30.68
Economic Calendar
EUR
- ZEW Economic Sentiment Index (Jul) 7.00pm
US
- Retail Sales (Jun) 10.30pm
- NAHB Housing Market Index 12.00am
This article was written by James Woods, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
