Market Update - 2nd November 2024

Written by William Cooper

Domestic:

The ASX has experienced very ordinary performance this past fortnight, with the top 200 stocks tumbling 1.49% from its near record highs. This came as investors pushed out the timing of interest rate cuts into mid-next year. This was coupled with a sharp selloff of stocks at the beginning of the fortnight which saw investors take advantage of the strong market conditions to cash in their gains.

Real estate was the worst performer for the fortnight, with the higher-for-longer interest rate setting placing further pressure on this sector. This had investors selling-off their REIT’s, which ultimately led to a 5% decrease in the industry this fortnight. Consumer staples also saw major falls in prices, with concerns about the industry arising after industry giant Woolworths warned earnings are well below last years’ figures. This had a contagious influence on the rest of the sector with rival Coles tumbling as a result.

International:

As we reach the midpoint of the earnings season, a select group of U.S. mega-cap technology companies, the magnificent 7, continues to generate a disproportionate share of overall earnings growth. Analysts anticipate that these industry leaders will report an average third-quarter growth of around 18.1%, underscoring their significant impact on market dynamics.

Large-cap stocks have held up better than small-cap stocks, with growth stocks outperforming value stocks. This trend aligns with global markets, where technology and growth-oriented sectors are showing resilience.

Gold has shown considerable strength this year, rising by more than 31%. This increase is driven by uncertainties related to geopolitical events, upcoming elections, and concerns over the rising debt burden in the United States. The U.S. government's need to issue billions of dollars in debt ahead of the election has added to market nervousness, especially in a relatively thin trading environment.