Weekly ASX Report for 11 Mar to 15 Mar 2024

With earnings season out of the way in the US and Australia the focus for investors has once again moved on to economic data and commodity price action.

Last week we saw Eurozone and US markets briefly make new record highs before closing off those highs on the back of a slightly hotter than expected US inflation report and messy US retail sales data that was below expectations.

Chinese shares continued their recent rebound rising 0.71%, Hong Kong shares gained 2.35% but Japan's Nikkei index fell 2.47% on the increasing expectation that the Bank of Japan will end its negative interest rate policy sooner rather than later (it meets this week).

The Australian Dollar lost ground against the US Dollar falling 0.87% to $US0.6560.

2-year Australian bonds rose 15 basis points to 3.816% while 10 year Australian bonds rose 16 basis points to 4.163%.

Most sectors of the Australian equity market experienced weakness except for Real Estate Trusts and Utilities that rose 0.81% and 1.21% respectively.

Materials and Financial stocks were hit the hardest last week falling 3.36% and 3.17%. Financials have had a stellar run since October but Materials continue to show weakness on falling Iron Ore Prices and doubts about China's commitment to pump priming its economy via its housing sector. Stockpiles of ore and other commodities also point to weaker demand.

In other sectors Consumer Discretionary stocks fell 1.07%, Healthcare dropped 1.80%, Industrials shed 2.69% and Energy lost 1.80%.

In the week ahead the reserve Bank of Australia meets to discuss interest rate settings (Tuesday). The market largely expects the RBA to keep cash rates on hold at 4.35% but the RBA Governor was at pains to point out at the last meeting that interest rate hikes remain a live possibility. The Board of the Reserve Bank now also meets every 6 weeks as opposed to monthly so there will be some adjustment by all parties as the RBA has more data to make decisions on but less opportunities to make interest rate adjustments.

The US Fed meets this coming week (Wed) as does the Bank of England (Thur) and the Bank of Japan (Tues). The UK and the US are expected to remain on hold but Japan is tipped to scrap its Yield Curve Controls.

On a side note Japan is no longer in a technical recession with revised December quarter data showing flat rather than negative growth.