17 June 2024 | Weekly Snapshot

Did you know?

Across the World, 20% of total new car sales are now Electric Vehicles. This is largely due to China, who are both the largest producers and consumers.

Market Movements

The Australian market traded lower by 1.3% this week, led by resources (down 4%) and Industrials (down 2.6%). South32 and Fortescue were both down circa. 5%. This was driven by lower commodity prices (iron ore and copper down 1.3% and 2.0% respectively) and a hangover from some weak manufacturing data in the USA last week.

Australia added 39.7K new jobs in May, a decent beat on the 30K expected. The unemployment rate fell to 4.0% from 4.1% in April. Interest rate futures pared odds for a year end rate cut to 30% (down from a 36% change) and are currently not fully pricing in a rate cut until May 2025.

In the USA, the S&P500 market rose by 1.5%. Tech stocks led the market higher (Nasdaq up 2.9% and the IT sector up 5.0%). Nvidia and Apple were both up 7.2% and 8.8% respectively. Apple released news relating to its new ‘AI’ functionality, whilst Nvidia rose on no news.

The annual inflation rate fell to 3.3% vs. expectations of 3.4%. Weekly Initial jobless claims of 242K were higher than the 225K expected, resembling a slow softening in the employment market. The Federal Reserve held rates steady as expected and the updated ‘dot plots’ forecast showed that only one rate cut is expected in 2024 and 4 rate cuts in 2025.

The tech-heavy Nasdaq index continued to lead the market higher. The Nasdaq is trading on a forward price-to-earnings multiple 28x earnings, which is lofty compared to the last 10 years. Earnings growth (green line) has been strong but to support this elevated valuation level, earnings will have to stay strong.

Portfolio Movements

Apple’s annual worldwide developers conference wraps up

• Apple’s long-awaited artificial intelligence conference has been completed. CEO Tim Cook emphasized the need for privacy and personalization, “beyond artificial intelligence,” into “personal intelligence.”
• Siri will utilize ChatGPT to help answer questions. ChatGPT will also be integrated to the new OS later this year, with some features available next year.
• Shares in Apple were up 8.8% this week.

Woodside achieves first oil at Sangomar

• Woodside announced it had achieved first oil from the Sangomar field offshore Senegal (West Africa), marking the safe delivery of the country’s first offshore oil project.
• The Sangomar Field as a nameplate capacity of 100,000 barrels/day and cost shareholders US$5.2 billion.
• Woodside shares were largely unchanged this week.

CSL’s Seqirus wins government awards for Avian Flu vaccine

• CSL’s Seqirus division is one of the largest influenza vaccine providers in the world and has been awarded contracts by the EU and US governments to provide pre pandemic vaccines for Avian influenza (bird flu), a type of influenza that spreads predominantly among birds.
• For the US, Seqirus will deliver approximately 4.8 million doses of pre-pandemic vaccine to fight the H5N1 strain currently circulating in the US. The EU also signed a contract for the supply of 665,000 the same pre-pandemic vaccine.
• Seqirus reported a weaker than expected result at the first half noting falling immunization rates.

The Week Ahead

• Monday: China retail sales will be released, with expectations for a 3% year-on-year increase. This is underwhelming from an equity investors point of view and questions linger – will China engage more stimulus or is the economic slide going to continue?
• Tuesday: RBA interest rate announcement. Expectations for no change at 4.35%. US retail sales will be released, with expectations for a 0.3% increase from the prior month.
• Friday we have global manufacturing data (Global PMI) where expectations are for a modest expansion of 51 (above 50 means growth). At the same time, the global services reading will be announced, with market expectations for a strong reading at 53.1.