Markets resumed their march upwards with the Dow Jones hitting new highs in intraday trading, as investors continued to rotate into the broader market and smaller companies.
The Dow closed 0.62 per cent higher to close above 40,000 led by rallies in Home Depot and Caterpillar which closed up 1.7 per cent & 1.4 per cent respectively. The broader S&P 500 finished 0.55 per cent higher and the Nasdaq Composite added 0.63 per cent on the day.
Turning to US sectors, the best performing sector was Consumer Discretionary which closed up 0.96 per cent. The worst performer and only sector to finish the day in the red was Communication Services which closed down 0.75 per cent.
In good news for small companies, the rotation into the smaller end of town continued on Friday with the small cap Russell 2000 Index adding 1.1 per cent on the day to finish the week ahead by 6 per cent as investor belief in a soft landing for the broader economy rises, giving a boost to smaller companies.
Producer price data or PPI which was released late on Friday added fuel to the rate cut narrative as economists pointed to the components of the data that feed into the Fed’s preferred PCE deflator measure coming in significantly lower than expected for June.
In company news, financials bucked the trend following several earnings results with JPMorgan closing 1.2 per cent lower even after the bank posted better than expected revenue numbers. Citigroup closed 1.8 per cent lower also following a better than expected second quarter result. Wells Fargo fell 6 per cent after the bank reported net interest income fell short of expectations.
European markets followed the US lead with the regional Stoxx 600 index closing up 0.97 per cent. Telecom stocks rose 0.59 per cent with Ericsson rising more than 8 per cent at one point before pulling back after the company reported a smaller than expected revenue decline in the second quarter.
Futures
The SPI futures are pointing to a 0.6 per cent gain.
Currency
One Australian dollar at 7.45am was buying 67.75 US cents.
Commodities
Gold lost 0.05 per cent. Silver fell 1.61 per cent. Copper gained 1.92 per cent. Oil lost 0.50 per cent.
Figures around the globe
European markets closed higher. London’s FTSE added 0.36 per cent, Frankfurt gained 1.15 per cent, and Paris closed 1.27 per cent higher.
Turning to Asian markets, Tokyo’s Nikkei dropped 2.45 per cent, Hong Kong’s Hang Seng gained 2.59 per cent while China’s Shanghai Composite closed 0.03 per cent higher.
On Friday, the Australian share market closed 0.88 per cent higher at 7,959.28.
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
