Global markets rose overnight, as US markets (S&P 500 Index +1.5%) reversed their two-day geo-political related sell-off on better earnings and economic data, with the market index back to May levels.
Earnings set the tone for stocks, with solid reports from Moderna and PayPal. US services data for the month of July reported a surprise rebound, calming investor fears regarding the US economy falling into a deep recession. Tech shares led gains, with all sectors trading higher except for energy as WTI crude oil fell -3.1% down to just a touch below $91/barrel.
European markets (Stoxx 600 Index, +0.5%) rose following Wall Street’s lead as tech shares also led gains in Europe.
Locally, stats NZ reported NZ unemployment came in at 3.3% for the June quarter, edging up from 3.2% in the March quarter. While average hourly wages rose +3.4% for the year. The ‘weak’ data was welcomed by NZX as it could cause the RBNZ to consider slowing down the pace of further interest rate hikes.
Lynas Corp (LYC:ASX)
Rare earth miner Lynas jumped +7.6% yesterday, after announcing plans to invest $500m into its Mt Weld mine to expand capacity to meet accelerating demand. Global demand for rare earth metals and NdFeB magnets is expected to double from 130,000 tonnes consumed in 2020 to 265,000 tonnes to be consumed in 2023 – largely driven by electric vehicles and wind energy.
We are Buy (High Risk) rated on Lynas as a direct benefactor to increased adoption of electric vehicles and clean energy alternatives, but warn the stock can be volatile
Australia & New Zealand Market Movers
The Australian market (ASX 200 Index, -0.3%) fell on a mixed day of trade.
Tech shares rose strongly following a strong rebound rally for Asian tech stocks following sell-off earlier in the week, while materials edged higher offset by remaining sectors trading in the red.
The New Zealand market (NZX 50 Index, +1.5%) was up strongly, reacting positively to weak employment data.
Yield stocks were generally stronger as they benefit from lower interest rates – Spark (+1.9%), Contact Energy (+2.5%) and Genesis (+1.4%).
Construction companies were up ahead of the Commerce Commission’s draft reporting into building products due today, Fletcher Building rose +3.3% and Vulcan Steel was up +3.5%.
3 Things Markets will be Watching this Week
- US Corporate Earnings continue, with nonfarm payroll (employment) data in the US out later in the week.
- The Bank of England’s rate decision and PMI manufacturing surveys across the globe.
- Locally, reserve Bank of Australia’s cash rate decision.
