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Chapter 1: What factors contributed to the ASX hitting a four-week high?
The Aussie share market bounces back, doing enough to hit a one-month high. And what does today's softer economic growth numbers mean for interest rates? Good afternoon, I'm Steve Daglian. It's Wednesday the 3rd of June. Welcome to the CommSec Market Update. Well, a nice little performance for the Aussie share market today. It was the first lift of the entire week, actually.
The ASX 200 up by about 0.9%. And considering the declines on both Monday and Tuesday were tiny, it does mean that we're up a good three quarters of a percent so far this week. and actually was enough to see our share market largely touch a near four-week high as well.
Chapter 2: How do softer economic growth numbers impact interest rates?
So this morning, we got off to a bit of a mixed start, but what seemed to help at about 11.30am Eastern Standard Time was an update on economic growth in Australia. Now, it was actually a touch below what the market was expecting. So in the March quarter, GDP rose by 0.3%. The market thought that could have been around 0.4%. That was the expectation. So it was largely boosted by data centre
investment. And even though economic growth data is typically considered to be quite backward looking, there were some signs that the Aussie economy was perhaps slowing a bit even before the conflict in the Middle East and the three rate hikes really start to bite. So this could potentially be a headwind for consumer spending.
Adding to this, of course, in the last couple of weeks, we've had softer inflation data in Australia, softer jobs data as well. So it doesn't really change CBA economist expectations. That probably is it as far as interest rate hikes are concerned in 2026.
The market broadly is currently pricing in about a 50% chance of a rate hike in Australia by August and almost no chance at all of one at the June meeting. which is coming up in about two weeks' time.
So from now through to the August meeting, we still have some important information that will be handed down, a couple of updates on inflation in Australia, and a couple of updates on the labour market as well. So keep that in mind. So the market went from being up about a quarter of a percent before this GDP data was handed down, as I said, to now being up about 0.9%.
Secondly, we also had a decent lead coming through from Wall Street last night. Both the S&P 500 and the Dow Jones hit fresh record highs. So there continues to be a bit of AI-related excitement, the real buzzword, of course, that we keep hearing on a daily basis. And this seems to be doing enough to offset expectations. escalating tensions in the Middle East.
Now, this is at least for the American markets, which have been an outperformer together with the South Korean markets and a few others as well. For those wondering why this is, the US is obviously very tech-focused. About 45% to 50% of the entire US market is made up of those big tech names like Nvidia, Microsoft, Apple, etc. Here in Australia, tech is tiny.
It's about 2% of the entire share market. So let's turn our attention to the sectors of our market today, really across the market. We've had even those sectors that were in the red, saw some of those declines pairing back a bit over the course of the afternoon.
But if we look at the big winners, we've had energy stocks, which are up about 1.7%, very similar gains as well for the miners, which are up about 1.6%. So they've been boosted in large part by lifting commodity prices. Oil was up around 1.7 last night. Gold rose about a third. And even iron ore, which has been underperforming a little, is up around a tenth of a percent.
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Chapter 3: What sectors saw gains in the Australian share market today?
So this is to offset a ban on Russian imports, which is expected to fully kick in 4%. from 2028. So this news seemed to be enough to push many of our uranium miners higher. Another standout today was Superloop. It rose about 8%. Now, it held its investor day today and basically raised its earnings forecast for the year. It put this down to strong operating performance in the
together with a recent acquisition of Lightning Broadband, which it actually completed fully last week. And it reckons that's probably going to lift its results a bit. And also BHP and Rio, two of our largest miners. BHP, of course, the world's largest miner, up in the order of 2% to 2.5% today. So both of these stocks have hit fresh record highs.
One of the reasons for this is less to do with iron ore, which is certainly a bit more resilient than what many had anticipated, but copper. copper has continued to go from strength to strength on the market. So it rose about 2% overnight, up close to 40% now over the past 12 months, a future facing commodity.
And recently in the last half or so, it has become the biggest earner for the likes of BHP and many other miners as well. On the losers side of things, I mean, Lovisa, one of the worst, the retailer, down about 6%.
JB Hi-Fi down in the order of four to five for a lot of the day, although those declines seems to have been pegged back a little, maybe off the back of the softer economic growth numbers that came through. Also, Harvey Norman fell quite heavily. So, These stocks, at least some of them, have been on the receiving end of a couple of price target cuts from brokers today.
Basically, they reckon that there's a possibility there of a softer housing market following those three rate hikes that we've had already this year, and also some caution building post the federal budget as well, all things that could weigh on spending. So, so far this year, retail stocks have certainly underperformed. They're down in the order of around 12%. The Lottery Corp.,
Also down a little today as it holds a meeting with investors and LendLease, the property group, down about 7%. It's actually in its sixth straight week of declines now and was on the receiving end of a price target cut. So let's look forward from here because tonight is going to be a pretty busy one over in the United States. There's a lot to watch.
Probably one of the key things is going to be a quarterly report. profit result from Broadcom, which is like many consider a competitor to Nvidia, CrowdStrike and Medtronic as well. But there'll be a bunch of economic indicators as well. So there's a monthly update from the ADP, which is like an update on private sector jobs. This is for the month of May. So that will get a bit of attention.
There's also a weekly update on oil inventories in the United States. And this has a tendency on a weekly basis to potentially move oil prices. So that's going to be another to watch. There'll be figures on durable goods orders, the services sector, inflation coming out out of Europe as well. And looking forward to our market tomorrow. really pretty quiet as far as what's scheduled.
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