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Markets have been fighting two wars this week: one in the Middle East and the other between AI bulls and bears on Wall Street. Reporting season might just settle which one matters more.
Bloomberg editor John Authers looked at this week’s big market-moving story, the resumption of hostilities between Iran and Donald Trump over the Strait of Hormuz and renamed the ceasefire MOU and called it a MOM – that is, a “Memorandum of Misunderstanding”!
Looking at this week's market revelations I'm thinking about an R-word. However, it's not for the negative vibe that is a recession but a more positive development, namely rotation.
Markets should have celebrated peace, but a rotation out of big tech into defensives has Peter Switzer asking whether headwinds now outnumber tailwinds. The S&P/ASX 200 fell 0.73% for the week to 8,764 on profit warnings and softer iron ore, copper and gold prices, while a better-than-expected US PCE inflation read eased the pressure for higher rates.
Wall Street finished a holiday-shortened week on a high as the Iran peace deal removed an oil-price headwind. Peter Switzer counts five tailwinds versus two headwinds and stays cautiously positive, even as the S&P/ASX 200 slipped on Friday on BHP's potash cost blow-out.
The S&P/ASX 200 jumped 2.07% for the week to 8,804 — the best one-day gain since April — on Trump peace-deal hopes and signs the RBA may have stopped rate rises. US markets were mixed with the NASDAQ off 0.30% and the S&P 500 down 0.04% on the week, despite Friday gains driven by SpaceX's blockbuster IPO debut.
Wall Street's nine-week winning streak ended on a Broadcom-led tech sell-off, with the NASDAQ down 4.18% and the S&P 500 down 2.64% on the week. The S&P/ASX 200 finished down 1.22% as investors rotated into healthcare.
Wall Street is still betting an Iran war resolution will eventuate without tipping the global economy into recession. The market is ordering a TACO and is not expecting a NACHO, and a peace deal ASAP is critically important for stocks.
US stocks were up again as the evidence builds that maybe a peace deal isn't far away.
Is anyone surprised that our market was a loser this week, with the Budget colliding with rising interest rates and the Treasurer telling us our economy is slowing to 1.75% from a previous guess of 2.25%? Throw in the stalemate in the Strait of Hormuz and the bigger question has to be this: how come US markets rose this week?
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