Market Update - 7th September 2024

Written by Brad Laird & William Cooper

Domestic

It certainly hasn’t been a strong start for the month of September which historically has been the worst month for Australian markets, averaging a 2.2% decline since 2014. Despite trending upwards for most of the fortnight, the ASX finished down for the period, tumbling 1.88% on Wednesday in the wake of weak Chinese and U.S. manufacturing data which reignited fears of a potential hard landing. This saw selloffs in the commodity markets which adversely impacted materials, utilities and energy stocks who were the major underperformers for the fortnight. Key commodities, particularly copper, oil and iron ore all suffered from demand fears, iron prices in particular are down over 7% this week, pressuring big names such as Fortescue metals who are down 12% the period.

Debt funded industries such as financials and real estate were major beneficiaries of lower interest rate speculation, and the recession fears have caused these sectors to gain this fortnight. Stronger performance from IT towards the end of the period helped bring its performance closer to flat, after being buoyed by renewed investor enthusiasm after the tech data centre company AirTrunk sold to U.S. financial giant Blackstone for $24 Billion.

International

Leading market indexes showed varied results during the quiet trading week before the US holiday break. With Monday's trading volume hit a yearly low, surpassing only those days with shortened trading hours.

The tech-heavy Nasdaq faced the biggest challenges, partly due to a significant drop in NVIDIA's stock. The chip giant's stock price decreased by 10% with largest ever fall in a day of trading, wiping more than $400 billion in value as investors ran to the hills, led by concerns of an artificial intelligence bubble.

Value stocks outperformed growth shares by the largest margin since late July, showing a shift in investor preferences.

In Europe, the FTSE 100 rebounded after a volatile summer, supported by political stability and strong corporate earnings. However, inflationary pressures remain, especially regarding wage growth, which may limit the Bank of England’s ability to reduce rates further.

Investors across all regions are keeping a close watch on macroeconomic indicators, especially U.S. jobs data, which could significantly impact the Federal Reserve's rate decisions later this month.