Market Update - 15th June 2024

Written by William Cooper

Domestic:

The RBA is set to meet early next week and announce the decision on the cash rate. GDP rose 0.1% in the March Quarter and 1.1 per cent since March 2023. Unemployment figures also came out 4% higher in the month of May than the previous month. The stubbornness of economic activity in the Australian economy is not allowing inflation to fall in line with RBA expectations, leading to the timeline of the ever-elusive rate cuts getting pushed back to as early as mid-2025. Due to the complexity of the situation and the constantly evolving data being released, we will not speculate, instead just sit and wait to see the outcome that Michelle Bullock and her fellow board members come to.

The ASX saw strong returns across the majority of sectors, however the heavy hitters in Materials & Energy, who collectively make up around 23% of market capitalisation in the entire ASX, slumped for the fortnight limiting the growth of the market as a whole. Falling iron ore prices weighed down on the market heavyweights. Rio Tinto lost 1.9%, BHP was down 1.8% and Fortescue declined 3.2% all off the back of Iron dropping by 3.1% to $105.4 USD/tonne. Consumer discretionary was up just shy of 5%, off the back of positive movements in price from Woolworths (up 5.23%), Coles (up 5.51%), as well as Treasury Wine Estates (up 8.34%) on the fortnight.

International:

In the international landscape the US’s Nasdaq Composite was the big winner rising 5.56% for the fortnight, as US stocks hit record highs for 4 consecutive days. The Fed held rates at 5.5%, a decision which came off the back of cooling inflation data. The Nasdaq is heavily weighted towards stocks in the technology sector, and strong performance from Tesla, Broadcom and (you guessed it) NVIDIA have meant the Nasdaq outperformed the S&P500 for the period.

SSE Composite struggled for the second consecutive fortnight as consumer price growth was weaker in May and factory prices dropped for the 20th month in a row. The world’s second largest economy is facing persistently weak domestic demand and the current outlook on the equity market is reflective of this.