1 April 2024 | Weekly Snapshot

Did you know?

Across the globe there are currently 11,000 data centres, which consumed 7.4 Gigawatts of power in 2023. This is equivalent to the electricity consumption from 6.5 million homes in the USA. Data centres are projected to grow 360% by the year 2030 (equivalent to 23 million homes). On simple maths, this could suggest electricity demand could grow by approx. 7% over this period from data centre consumption alone. This will present a challenge for a world struggling to meet the demands of a growing population and an aspirational transition away from fossil fuels to renewables.

Market Movements

Australian Share Market (ASX 200):
The local share market rose 1.62% for the Easter-shortened week, buoyed mainly by gains in mining companies. The week also capped off a 5th straight month of gains for the ASX200 and a total gain for the quarter of 5.33%. BHP was the main contributor, rising 1.1% and accounting for around a quarter of the index’s gains. Fellow iron ore heavyweights, RIO and Fortescue, and contributed, despite the price of iron ore falling 8.5%% over the week. Gold miners were also big contributors to last week’s local gains, as the price of gold continues to surge, supported by demand from central banks across the globe. Property stocks were also buoyant, with the REIT sector up by 3% led by its biggest single component, Goodman Group, and 4 REITs hitting 52-week highs, supported by hopes that interest rates have peaked. The RBA will continue to weigh the tug-of-war between resilient home prices and sticky inflation versus cost of living pressures experienced by many households as it contemplates a rate cut later this year.

International Markets:

Global share markets finished the week, the month and the quarter up at record highs. The MSCI All Country World Index of nearly 3000 global companies from both Developed and Emerging Markets closed slightly higher for the week, bringing the monthly gain to 2.95% and the quarter finishing 13.15% higher (both in AUD terms). More than 10% of those gains came from one company – Nvidia – which finished with a quarterly gain of 82% despite dropping by 4.17% last week. Nvidia’s gains powered the US S&P500 index to its second consecutive quarter of double digit gains, up 10.16% for the first 3 months of the year. These gains were surpassed by Japan (up over 20%) and the German index (10.39%), as the 6 month rally showed solid signs from broadening out geographically and by sector. Whilst it has been the US IT sector that has driven most of these gains over this period, it was the largest detractor from the benchmark last week, with Financials, Healthcare and Energy being the drivers.

Whilst Nvidia has captured many of the headlines – especially as the poster child of the AI boom – the world’s largest listed company, Microsoft, quietly added AUD515 billion to its total market capitalisation over the month, gaining 12%. To put this in context, this is roughly the equivalent of the total combined value of Australia’s two largest companies, BHP and CBA.

After a lacklustre start to the year, shares in Gold companies have really starter to shine this month, with the 6.82% rally in the GDX Gold Miners ETF (in USD) capping off an impressive 20% gain for March. This has been powered by the price of physical gold which made several record highs over the month and is up 10% so far this year.

Portfolio Movements

Dutch Government’s Concessions for ASML Ahead of Chinese Visit

• The Dutch and Chinese government leaders are meeting to discuss the import restrictions being placed on the Netherlands largest company ASML with their second largest export market – China. Current export licenses expire at the end of the year impacting billions of Euros worth of equipment along with servicing of existing equipment.
• The Dutch government is reportedly finalising plans to inject 1 billion Euros in funding to keep ASML based in the Netherlands. Funding will target infrastructure investments where ASML’s offices are located, housing and an expansion of the university of technology where ASML taps into to obtain its technically skilled workforce.
• The government is also considering leaving in place the 30% ruling scheme which allows expats moving to the Netherlands for work to keep 30% of their income untaxed. Skilled labour shortages are becoming a major issue in Europe particularly with onshoring requirements for semiconductor plants set to soak up technicians.

A Bumper Week for Aussie Dividends

•  An early Easter payment will be seen this week for shareholders with a massive $18.8 billion in dividends being paid, as a part of the $34 billion from the recent December half reporting season.
• Payments are due from BHP, CBA and Telstra with ANZ, NAB, MQG and WBC due in May. 80% of the largest companies on the ASX have raised their dividends this year.
• Despite a fall in aggregate profits of 35% and cash levels being down 25%, 52% of companies paying a dividend had lifted payouts with 19% holding them steady and 29% cutting them. The reporting season surprised on how strongly consumer focussed companies performed and that miners held their payouts high despite falling commodity prices.

Apple Doubles Down on China

•  Weaker sales in China has resulted in CEO Tim Cook flying to Shanghai last week to be present for Apples grand opening for a flagship store in Shanghai. This will be Apple’s 57th Chinese store and their second largest after the NY store.\
• Cook also met with key suppliers ‘(given concerns around the supply chain shift out of China into India and Vietnam), to reaffirm Apple’s presence in China in the lead up to the iPhone 16 release later this year.
• Apple announced using Baidu’s AI platform for products in China, similar to the recent announcement of using Google AI for the rest of world. Apple also announced it will release the Vision Pro headset in China later this year

The Week Ahead

Another shortened week for many countries due to Easter, but packed full of manufacturing, employment and inflation data:

•  Tuesday: Manufacturing data for the EU, Germany, Italy Japan and the UK; monthly factory orders data for the US
• Wednesday: EU CPI, and unemployment; US PMI data
• Thursday: PMI data for EU, Japan and UK; US initial jobless claims
• Friday: US non-farm payrolls, unemployment rate and hourly wage.

In Australia, we have a number of measures of housing data released, along with trade data on Thursday.