Market Update - 21st September 2024

Written by William Cooper

Domestic:

September has historically been the worst performing month in the ASX; however, this month is shaping to buck the trend. The ASX200 has risen 1.85% for the month thus far, and has hit new all-time highs, reaching 8,199.6 points late in Thursday’s trading. The real estate sector has been consistently growing since late June, but has seen a major gain this fortnight, rising by 6.52%. The property market is well-known to be extremely rate sensitive; its performance being heavily interrelated with monetary policy projections and decisions. The market has been speculating interest rate cuts for some time now, which has fuelled positive REIT performance, but the looming U.S. Federal Reserve meeting, where a cut was heavily speculated, is what has driven the above-average performance this period.

The miners also rose significantly during the period, with strong performance from Uranium and Lithium miners. Russia’s Vladimir Putin threatened to limit its exports of Uranium as retaliation to Western sanctions, which saw some huge gains from these miners. Lithium miners were also trading higher in the market after demand for the ore rose in response to Chinese electric vehicle production demand.

The RBA’s next meeting is next week, on the 24th of September, and it will be a much anticipated outcome considering what we have just seen in the Fed’s decision.

International:

The U.S. Federal Reserve made a huge announcement on Thursday which saw interest rates get slashed 50 basis points from 5.5% to 5% for the first time since March 2020. The Fed lifted rates to a two-decade high after price growth surged to the highest levels seen in a generation. However, the Fed is convinced that inflation has cooled, and in its objective of aggressively pursuing the fabled soft-landing, has decided now is the time to cut rates. The U.S. markets responded favourably to the decision with the S&P500, Nasdaq and Dow Jones rising 5.64%, 7.93% and 4.16% respectively over the fortnight.

Europe’s broader market index the STOXX 600 is nearing its all-time high, which it achieved in late August, benefitting from the positive sentiment surrounding the Fed’s rate cut decision. Retail and Travel industries led gains across the continent, whilst ceasefire reports in Ukraine led a lowering of the defence sector.

In Asia, China’s economy continues to sink; issues such as slowing growth, deflation crippling spending, high levels of debt and international investors are not convinced China’s age-old approach of doubling-down on infrastructure is going to be the approach. Asia-wide optimism after the Fed’s policy decision was enough for other nations, but not enough to see China’s market improve. International business centre Hong Kong has its primary index the Hang Seng rise above the 18,000-point mark for the first time in 2 months and the Nikkei 225, despite the yen weakening to the greenback, rose by 2.10% for the period.