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25 June 2024

Morning News Summary

Tech Sell-Off, Investors Broaden Portfolios

US investors appear to have participated in some profit taking on Monday, recycling gains in tech stocks into other areas. Europe reversed Friday’s losses while Asia extended its weak trading streak.

Cyclical profit taking and portfolio padding sees tech stocks fall and industrials rise in the US

Traders seemed to enjoy taking their profits after Nvidia rose to become the world’s most valuable company, the stock is now down -5.4%. Other chip stocks such as TSMC and Marvell fell -3.1% and -4.2% respectively. These profits went straight into the industrials, with the DOW up +0.7%, the S&P 500 relatively unchanged at -0.0%, and the NASDAQ down -0.6%. Meta took on +0.2% after a report discussed the possibility of integrating its genAI models into Apple’s iPhones. RXO skyrocketed +21.0% on plans to buy United Parcel Services' logistics business unit for US$1.025b. The US 2-year treasury yield climbed +1 bp to 4.74% while the 10-year fell -1 bp to 4.25%. The US now looks forward to the presidential debate and the final Q1 GDP numbers, both at the end of the week. ​​​​​​​

Europe sees modest gains, backed by positive corporate news ​​​​​​​

Europe reversed Friday’s losses as corporate news and a drop in bond yields motivated confident trading, coupled with strong expectations for rate cuts in the near future. Europe’s STOXX 600 added +0.7% while London’s FTSE 100 climbed +0.5%. Prudential soared +7.3% after it launched a £2b share buyback program. Frasers Group jumped +4.0% after it announced it was on track with forecasts and it had finalized a partnership agreement with THG tech platform. Potential talks within the European Union to impose tariffs on Asian vehicles saw German automakers rally. Zalando lost -4.0% after Morgan Stanley reduced its rating. Pharmaceutical company Argenx soared +9.0% after it received approval for its chronic inflammatory demyelinating polyneuropathy drug.

Sluggish trading in Asia continues

Another lacklustre trading day in Asia saw Japan’s Nikkei 225 add +0.5%, the only winner in the session. Hong Kong’s Hang Seng just slipped -0.0%, Korea’s Kospi fell -0.7%, while China’s Shanghai Composite and CSI 300 lost -1.2% and -0.5% respectively. The ASX 200 fell -0.8%, extending the end of last week’s losses. ResMed fell -13.0% after results from a weight-loss drug trial reignited doubts about the company’s key markets. The NZX 50 fell -0.5%. ​​​​​​​

WTI Crude, Gold, and Iron Ore up

WTI Crude added +1.2% to US$81.67/bbl, Gold increased +0.5% to US$2,332.89/oz, Iron Ore gained +0.4% to US$106.96/MT.

NZ Headlines

Wellington-based app developer Storypark is looking for investors but says it has no plans for an ASX listing ‘at this stage’.​​​​​​​

The NZX-listed retailer, The Warehouse Group, forecast earnings before interest and tax (EBIT) of between $22m and $30m, excluding the loss from discontinued operations and any potential restructuring costs. Compared with an EBIT of $83.4m for the year prior, earnings for FY24 could be down between -64% and -74%.

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