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Australian stock market rallies as markets price in future rate cuts.

Daily Market Update

The S&P/ASX 200 bounced back above the $7000 on Tuesday finishing 1 percent higher, boosted by a more cautious stance taken by US Federal Reserve members, and signs of easing inflation in Australia. This positive performance came after remarks from Federal Reserve Vice Chairman Philip Jefferson and Bank of Dallas President Lorie Logan suggested that the recent rise in long-term Treasury yields might reduce the need for the US central bank to increase its benchmark interest rate once more. By midday Tuesday, bond traders began factoring in a 31 percent chance of the RBA cutting interest rates by December 2024, up from zero chance the previous week. This change in sentiment flowed through to the Australian tech sector which lifted 3 percent, driven by Xero Ltd up 4 percent, WiseTech Global Ltd up 2 percent, Next DC Ltd up 2 percent, Altium Limited up 2 percent, TechnologyOne up 2 percent, Life360 up 5 percent.

Australian lithium and utilities surge.

Utilities were one of the best performing sectors rising 3.8 percent, driven by a 4.8 percent gain in Origin Energy. This increase followed the approval from Australia’s competition watchdog for an $18.7 billion buyout for the electricity and gas wholesaler. AGL, another utilities heavyweight, also rallied, gaining 3.9 percent. In other company news, Core Lithium saw a 7.4 percent increase to 36.5 cents after receiving a neutral rating upgrade from analysts at Citi. In the same report, Pilbara Minerals and IGO were upgraded to a buy rating. The report, led by analyst Kate McCutcheon, also forecasted strong long-term lithium prices. Pilbara Minerals surged by 6.2 percent to $3.96, while IGO gained 3.5 percent to $11.43. The Star Entertainment Group rose by 4.2 percent to 62 cents after major shareholder and billionaire businessman Bruce Mathieson purchased additional shares following the company’s recent capital raising.

  • US markets lift as Federal Reserve policymakers take a more dovish stance.

    On Tuesday, stocks enjoyed robust gains while Treasury yields declined, thanks to the dovish remarks made by Federal Reserve policymakers that bolstered investors’ risk appetite. The recent sharp rise in treasury yields over the last month is expected to carry enough weight to prevent the FED from needing to hike again, resulting in a change in investor sentiment and all US indices finishing in higher territory on Tuesday with the Dow up 0.6 percent, the Nasdaq up 0.6 percent and the S&P500 up 0.5 percent. These gains were noted across US companies including PepsiCo which reported third-quarter adjusted earnings of $2.25 per share, surpassing analysts’ expectations of $2.15. The beverage and snacks manufacturer also raised its full-year guidance, leading to a 1.9% increase in its stock price. Truist Financial witnessed a 6.7% surge, becoming the top-performing stock in the S&P 500. This followed reports from Semafor indicating that the bank was in discussions to sell 80% of its insurance brokerage business for $10 billion to private-equity firm Stone Point. Rivian Automotive saw a 4.6% increase, reaching $19.64, following an upgrade to “Buy” from “Neutral” with a $24 price target for the electric-truck manufacturer’s shares. This positive change came after Rivian’s recent announcement of a $1.5 billion convertible notes sale to raise additional funds, which had initially led to a sharp stock price decline.

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