The ASX has opened lower today following a post-New Year slump in the US closing out a good run at the tail end of 2023.
ASX futures were down 80 points or 1% to 7,536 this morning.
Hangover on Wall Street
The local bourse was close to a record high yesterday and things had been going well on Wall Street just last week, with investors ready to bet that the Federal Reserve’s cycle of rate rises was at an end.
Those hopes are starting to fade, with traders revising their expectations of cuts in 2024.
Fed futures markets are pointing to an 89% chance of a 25-basis-point rate cut at the March 20 meeting, down from 99% on Monday, and suggesting 150 basis points of easing this year to take the benchmark to 3.8% by December.
After a strong run, the Australian dollar slipped 0.8% yesterday to 67.57 US cents.
Apple's worm
The tech-focused Nasdaq paced the markets down, with Apple shares the Achilles Heel after Barclays downgraded the company’s stock on jitters about the performance of the newly released iPhone 15.
Barclays analysts cut their rating on Apple to ‘underweight’ and the price target to $US160 from $US161, which would mean a 17% decline in 2024.
The Apple surprise prompted a tech sell-off that saw Netflix slump around 5% during the day, and Nvidia and Meta lose more than 3% apiece.
Smaller techs were dragged down by the rout, with Intel, Atlassian (NASDAQ:TEAM) and Uber all feeling the pain with losses in the region of 4% or more. Uber rival Lyft slipped 8% while AMD and Block were down more than 6%.
What we saw
- Australian dollar: -0.8% to 67.62 US cents.
- Dow Jones: -0.2% to 37,612 points.
- S&P 500: -0.9% to 4,727 points.
- Nasdaq: -2% to 16,708 points.
- FTSE: -0.2% to 7,721 points.
- DAX: +0.1% to 16,69 points.
- Spot gold: +0.42% at $US2,071/ounce.
- Brent crude: -1.27% to $US76.05/barrel.
- Iron ore: +2.2% to $US141.75 a tonne.
- Bitcoin: +2.7% to $US45,876.
Lithium – hang on to your hat
Strong supporter of lithium stocks, Macquarie, has dramatically lowered its forecasts for lithium prices in the short to medium term, though it maintains its long-term outlook.
The company’s Commodities Strategy team’s latest lithium outlook predicts the market for lithium minerals will “remain in surplus for several years”, slashing price forecasts for calendar year 2024 to 2026 by 61-74% for spodumene, 44-71% for lithium carbonate and 63-73% for lithium hydroxide.
Longer term, Macquarie notes its lithium price forecasts are largely unchanged. In fact, they’ve actually upgraded their forecasts for spodumene prices from CY27 to CY29 by 9-19%, by 12-15% for lithium carbonate and by 10-12% for lithium hydroxide.
Housing prices still hot
Housing prices in capital cities around Australia are still on the boil, with growth at 8% - much stronger than wages growth, which will make it even harder for younger people to pick up their first home.
The Royal Commission also stopped the practice of established property owner parents going guarantor for their children, so this generational route to ownership is foreclosed, making wage growth a more important factor.
What’s happening in small caps?
The S&P/ASX Small Ordinaries closed at 2,934.48 yesterday, up 4.87% on the previous day.
Making news this morning, which you can read more about throughout the day with Proactive:
- Infini Resources Ltd (ASX:I88) is listing on the ASX, having closed its initial raise at around $5.3 million, with funds to go towards projects across Canada and Australia.
- Aurumin Ltd (ASX:AUN) has been granted licence E57/1254 at its 881,000-ounce Central Sandstone Project, part of the Sandstone Project which has a total resource of 946,000 ounces of gold.
- Alkane Resources Ltd (ASX:ALK, OTC:ALKEF) has received positive coverage from Edison following the announcement of an update to its mineral resource update which resulted in a 30% increase in the gold grade and a 22% (or 1.17-million-ounce) increase in contained gold at Boda.