14 June Markets at a glance

Around the grounds

• ASX modestly lower
• RBA in focus
• Nasdaq, S&P 500 hit record closing highs for fourth session
• BOJ decision on tap

A lack of investor appetite has seen the S&P/ASX200 trade moderately lower on the last trading day of the week, as miners and financials lead the drag. Sentiment is cautious ahead of the Reserve Bank of Australia (RBA)’s interest rate decision on Tuesday next week where it is widely expected the central bank will keep rates on hold at 4.35%.

The rate sensitive banks are all lower, with the financial sub-index on track for its worst week since mid-April.

Miners have touched their lowest level since late March, despite a rising iron ore price, with the index on track for its fourth consecutive session of losses and its worst week since August 2023.

Gold stocks are lower, tracking overnight losses in bullion, while energy stocks are a bright spot, underpinned by strong oil prices.

The ASX 200 is down over 1.5% for the week.

In the news

Stock specific, Australian listed shares of Telix Pharmaceuticals (TLX) are in focus, rebounding from two and a half week low after the biopharmaceutical company pulled the pin on its proposed initial public offering in the US saying it didn’t feel the proposed discounts were aligned with its duty to existing shareholders.

Finally, some broker moves of note, Citi has upgraded its FY24 and FY25 earnings forecast for MMA Offshore (MRM) to AU$146.6 million and AU$152.7 million respectively but has kept the price target steady at AU$3/share. The stock is up over 40% this year as of last close.

The broker has also updated its forecasts for Paladin Energy (PDN) expecting the Australian listed stock to benefit from near-term upbeat uranium prices with momentum expected to resume in H2 2024.

Target steady at AU$17 per share with a ‘buy’ rating retained.  PDN is up over 40% YTD as of last close.

And Morgan Stanely expects reduced earnings quality for ASX ltd (ASX) amid headwinds from lower market activity. Target set steady at AU$53.50/share with an ‘underweight’ rating retained. ASX has fallen 7.8% YTD, as of last close.

Going global

All eyes remain fixed on the Bank of Japan (BOJ) ahead of its key interest rate decision later this afternoon. Tokyo’s Nikkei 225 is drifting, while the yen is on defensive footing.

Markets are largely forecasting ultra-low rates to be maintained, however NAB’s central view is the BOJ could unveil a tapering to is mammoth bond purchases, in a bid to move away slowly but steadily from quantitative easing.

Elsewhere in currency markets, the euro has stumbled to trade relatively flat, expected to post a weekly loss of around 0.6%. The moves round out a turbulent week that saw French President Emmanuel Macron call a snap vote after France’s far right came out on top in the EU parliament election.

Both the Aussie and Kiwi units are marginally lower on the day but poised for a weekly gain.

Meanwhile optimism over cooling inflation stateside wasn’t enough to keep the US dollar down. The greenback climbed overnight despite May producer prices printing an unexpected fall (down 0.2%) in the month, core prices were also flat.

That coupled with Wednesday’s softer-than-expected CPI data signals the PCE measure, the FOMCs preferred inflation gauge, will also show softening price pressures. 

Source: LSEG Datastream – Reuters graphic/Stephen Culp 13/06/2024

The big dollar is likely to remain supported as Fed policy contrasts with more dovish global central banks.

Fed futures are pricing in two cuts this year, with traders tipping an over 60% chance the US central bank will hand down its first cut in September, according to the CME Group’s FedWatch Tool.

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