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ASX to fall, US stocks drop as China concern builds - 16/08/23

Market Wrap

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  • All 11 sectors finished lower in the S&P 500, with Energy and Financials leading losses, down 2.44% and 1.8%, respectively. The tech rally was short-lived as all growth sectors, including Technology, Communication Services, and Consumer Discretionary, resumed losses. Nvidia was the only mega-cap that ended in the green, up 0.41%.
  • Vietnamese EV maker VinFast’s shares soared 255% on its debut in New York, winning a market value of above US$85 billion, exceeding Ford and GM. The company launched an IPO on the Nasdaq Global Select Market under the symbol VFS.
  • The British Pound popped amid a two-decade-high wage growth in the UK. The country’s yearly wage increase printed at 7.8% in July, the highest since 2001. GBP/USD jumped to 1.2753 at the intraday high before paring gains and finished 0.16% higher against the USD.
  • WTI futures fell on China fears following a slew of disappointing economic data. WTI price fell off the ascending channel since late June, approaching an imminent support of 80.

 

Equities

U.S. stocks and government bonds fell, sending benchmark Treasury yields toward their highest levels since 2008 and the Dow industrials down more than 300 points.

Rising Treasury yields have muddied the outlook for equity investors. Concerns about China's faltering economy, meanwhile, continued to weigh on investor sentiment, as market participants digested a fresh batch of weak Chinese economic data and a series of surprise rate cuts.

The S&P 500 dropped 1.2%, while the Dow Jones Industrial Average declined 1%. The tech-heavy Nasdaq Composite shed 1.1%.

"People are a little bit nervous to really buy this pullback," said R.J. Grant, director of equity trading at KBW.

Earlier Tuesday, Chinese shares finished lower as weak July economic data weighed on the market. Indicators including industrial production and retail sales came "broadly below market low expectations, reflecting still-subdued growth momentum despite the ongoing policy easing," said Goldman Sachs economists. Chipmakers and consumer brands led the losses.

The benchmark Shanghai Composite Index dropped 0.1%. Both the Shenzhen Composite Index and the tech-heavy ChiNext Price Index declined 0.7%.

Hong Kong's Hang Seng Index dropped 1.0%.

Japan's Nikkei Stock Average advanced 0.6%, led by gains in electronics shares, after stronger-than-expected domestic growth data for the April-June period.

Australia's S&P/ASX 200 added 0.4%, rising on positive reaction to earnings among health, tech and financial companies.

New Zealand's NZX-50 slipped less than 0.1% amid softness in property and consumer stocks. Data showed that the average national house price fell 1.3% in July versus June.

 

Opto Research

 

Movers & Shakers

Broker Upgrades/Downgrades

(COH) Cochlear Price Target Raised 6% to A$280.00/Share by Goldman Sachs
​(COH) Cochlear Price Target Raised 5.9% to A$234.00/Share by Jefferies
(360) Life360 Price Target Raised 14% to A$10.50/Share by Goldman Sachs
(NAB) National Australia Bank Price Target Cut 0.6% to A$30.51/Share by Goldman Sachs
(PME) Pro Medicus Price Target Raised 5.3% to A$80.00/Share by Goldman Sachs
​(PME) Pro Medicus Price Target Raised 13% to A$71.00/Share by Jefferies
(SEK) Seek Price Target Raised 8.1% to A$25.42/Share by Jefferies
(SGM) Sims Price Target Cut 1% to A$17.50/Share by Goldman Sachs
(SGM) Sims Price Target Raised 19% to A$13.14/Share by Jefferies
(TWE) Treasury Wine Estates Price Target Raised 3.8% to A$13.50/Share by Jefferies
 

Commodities

Oil futures slumped, ending lower after another round of disappointing economic data out of China, which was followed by interest-rate cuts by the central bank in Beijing.

West Texas Intermediate crude for September delivery fell 1.8% to close at $80.99 a barrel on the New York Mercantile Exchange. October Brent crude dropped 1.5% to settle at $84.89 a barrel on lCE Futures Europe.

The data was "unlikely to help soothe concerns," said Warren Patterson and Ewa Manthey, commodity strategists at ING.

Gold prices slid further, settling at their lowest levels in more than a month, as Treasury yields and the U.S. dollar climbed following the release of official data showing a surge of sales by U.S. retailers in July.

Gold futures for December delivery dropped 0.5% to settle at $1,935.20 per ounce on Comex.

"Gold has been steadily declining since the middle of July and that bearish trend looks like it isn't quite over as king dollar returns," said Edward Moya, senior market analyst at Oanda.

       
      (All news & data sourced from Aspect Huntley / AFR / The Australian / Bloomberg / Reuters / CNBC / Wall Street Journal / Morningstar / OPTO / Trading Economics)ASX 


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