Market comment: Breath-hold and bank jitters
Market comments given to media today 9.20am Wednesday, September 11, 2024
The tech rally and buy-the-dip trend continued for a second day, with the Nasdaq gaining 0.8% and the S&P 500 rising 0.5%, though both indices stopped short of breaking through key levels as caution set in. It was for a couple key reasons. The market's hesitation to push past these levels is symbolic, as investors await the Trump-Harris inaugural debate and fresh US inflation reports, which could influence the Federal Reserve's upcoming rate decision. There's a 33% chance of a 0.5% cut, while markets have fully priced in a 0.25% cut (with a 133% probability). If the CPI matches or is softer than expected, it could help the market break through key levels.
However, September sentiment remains cautious, not just because of these factors but also due to growing concerns in the banking sector, reflecting the declining financial health of US consumers. Banking shares dropped, with JPMorgan $JPMorgan (JPM.US)$ down 5%, marking its biggest decline since April, as its president noted that analysts were too optimistic about next year's net interest income. Meanwhile, Bank of America's $Bank of America (BAC.US)$ CEO stated that its results would be flat, lower than Wall Street expected. This follows aFederal Reserve Bank of New York survey indicating delinquency concerns are at their highest since April 2020. The Fed’s Barr also unveiled sweeping new capital plans.
Elsewhere, Tesla $Tesla (TSLA.US)$ was in the spotlight again, with shares rising 4.6% after BMW $BAYER MOTOREN WERK (BMWYY.US)$ lowered its profit expectations due to brake faults, and Volkswagen scrapped its three-decade-old German jobs pledge to cut costs. VW $VOLKSWAGEN AG UNSPON ADS EACH REP 0.1 PREF SHS (VWAPY.US)$ had already announced last week that it might close factories in Germany as it battles declining sales.
Looking ahead, futures suggest the Aussie share market will rise following Wall Street, though gains may be subdued due to the ex-dividend season. Positive pockets are expected in copper, gold, silver, and nickel stocks as these key metals push higher, while iron ore stocks are expected to be on the nose as are oil stocks, as oil retreated with Brent crude oil down 3.7% as OPEC slashed demand forecasts for the second time in months.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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