10 July Markets at a glance

Around the grounds

• ASX falls as heavyweight miners weigh
• AUD surges against NZD as RBNZ keeps rates steady
• Iron ore slides on the Fed effect
• Copper falters as Powell keeps mum on US rate cut timing
• USD rebounds from 3-week low as focus shifts to CPI data

The Australian share market is lower with overnight testimony by FOMC Chair Jerome Powell not enough to break the bourse out of its trading range. In stark contrast to yesterday’s session, all ASX sectors are in the red bar telecommunications. Materials are leading the drag, down around 1% while interest rate sensitive financials are mixed with ANZ up but Westpac, CBA and NAB all marginally lower.

In commodities, Dr Copper has taken a hit after Powell’s testimony failed to send a clear signal on the timing of US interest rate cuts testifying on Capitol Hill. While the metal has gained around 5% since late June, markets are awaiting the China Communist Party’s long-delayed third plenum, which is forecast to focus on economic policy and reforms.

Copper traders are waiting for a China-related stimulus event to stir up the copper trade, however copper inventories in LME approved warehouses are clouding the outlook, as they climb to the highest level since October 2022 and nearly double levels seen in mid-May.  

Across the ditch, New Zealand shares are higher after the Kiwi central bank kept its OCR steady but flagged possible easing on the horizon. Bonds rallied in response as markets sharply ramped up bets for a rate cut as early as August if inflation slows as desired. Markets have now nearly fully priced in a move from the RBNZ in October, up from the just 66% before the decision. The NZD fell on the news, having held steady overnight, with support seen around the 60.48 US handle.

In the news

Stock specific, Incitec Pivot (IPL) shares have touched a two-month low as the company pulls the pin on talks with PT Pupuk Kalimantan Timur, Southeast Asia’s biggest urea fertiliser maker, for the sale of its fertiliser business. The move allows the company to begin its previously announced buyback of up to AU$900 million.

IPL shares were up more than 18% this year as of last close.

A similar story for Australian listed shares of Insignia Financial (IFL), among the day’s worst performers – shares down over 7% as it dismisses takeover talks with Citi. In a statement to the market, the wealth manager said it has not engaged Citi to field any takeover offers for the company and is not aware of any offer. The clarification comes after media reports said the company had tapped Citi bankers as private capital firms weighed up its potential as an M&A target.

The stock has risen nearly 7% this year as of last close.

Going global

Across the Asian region, Tokyo’s Nikkei 225 has recovered some lost ground in a choppy session, as financial shares rallied, and investors looked to profit taking after a weak start. Elsewhere, markets are muted as traders continue to digest Fed Chair Powell’s comments overnight. MSCI’s broadest index of Asia-Pacific shares outside Japan is relatively flat, though continues to hold near two-year highs hit at the start of the trading week.  

In currency markets the US dollar has recovered from three-week lows after FOMC Chair Jerome Powell struck a somewhat cautious tone on how soon the central bank would start its easing cycle. Sterling is little changed, while the euro has dipped slightly.

The onshore yuan has slumped to its weakest level since November in the wake of downbeat data that showed China’s consumer prices grew for a fifth month in June but missed expectations. Producer price data showed deflation remained persistent, as government support measures seemingly aren’t doing enough to propel a recovery.

Finally, Goldman Sachs Asset Management has poured cold water on a strong second quarter for both economic growth and equity market performance state side. In its mid-year outlook GSAM expects the world’s biggest economy to grow at a slower slip of about 2% in the period, with stocks to trade flat due to declining earnings growth and political uncertainty. On sectors, GSAM said it would be prudent to move away from the early winners in AI and diversify exposure to the trend.

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