Weekly market update - 6th of June 2023
Written and accurate as at: Jun 06, 2023 Current Stats & Facts
Local Market Ends Marginally Lower
In a week of tense economic activity, Australia's local market experienced a slight dip of -0.1%. This decline was primarily driven by a significant inflation print and the Fair Work Commission's decision to raise the minimum wage. These factors triggered anticipations of potential rate hikes in the future. The hardest hit were the consumer discretionary stocks, which are likely to experience dampened demand due to the impending monetary tightening.
U.S. Market: A Strong Week, A Stronger Finish
On the international front, the U.S. market exhibited resilience and positivity. The week ended on a high note following a strong jobs report and the much-needed resolution of the U.S. debt ceiling. These developments provided a much-needed boost to the economy and helped quell recession fears. Tech stocks maintained their upward trajectory, with the Nasdaq advancing by 2.1%, bringing its year-to-date gains to a remarkable +27%. The S&P500 didn't lag, marking an increase of +1.9%.
Key Market Drivers: Influences and Outcomes
Several significant market drivers influenced last week's economic activity. The U.S. Senate passed a bill to suspend the statutory limit on U.S. Government borrowing, known as the "debt ceiling," until January 2025. This decision prevented the first-ever U.S. default and ensured political stability before the next Presidential election.
Domestic inflation in Australia rose to 6.8% in April, well above the consensus estimates of 6.4%. The high inflation print has resulted in a further rate hike of 0.25% setting the cash rate at 4.10%. The market is suggesting a further hike in July is possible.
Economic Newsflow: Trends and Trajectories
Trends in housing have been defying structural weaknesses. Capital city dwelling prices rose by +1.4% in May, marking the most significant gain since October 2021, as buyers continue to defy rate hikes. Despite a decrease in housing loan commitments, the construction activity in Australia exceeded expectations in April, driven by growth in non-residential and public construction.
Share Price Movements – S&P/ASX 200: Winners and Losers
Among the significant share price movements in S&P/ASX 200, De Grey Mining (+10.0%) and Capricorn Metals (+10.0%) experienced growth, owing to the broader sector's strength. On the downside, Telix Pharmaceuticals and Sayona Mining saw drops in share prices, -8.5% and -11.9% respectively, due to various market conditions.
Wrapping Up
The past week was a mixed bag of economic developments and trends, from slight market dips in the local scene to significant boosts in U.S. indices. As we move ahead, market participants will be keenly watching the implications of these trends on future economic activity.