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Tech boosts broader market index

Overnight, the major averages rose, thanks to strong performance in the tech sector, as Wall Street aimed to bounce back from a challenging week.

The S&P 500 gained 1.41 per cent to end at 4,763.54, and the Nasdaq Composite jumped 2.2 per cent to close at 14,843.77. It was the tech-heavy index’s best day since Nov. 14. The Dow Jones Industrial Average added 216.90 points, or 0.58 per cent, settling at 37,683.01.

Investors were quick to buy into the technology sector, which had experienced a 4 per cent drop the previous week, particularly as yields fell on Monday. Notable tech companies like Nvidia surged more 6.4 per cent, reaching an all-time high, and Amazon also climbed 2.7 per cent, leading the charge in Nasdaq’s upward movement. Additionally, Apple saw a gain of 2.4 per cent following Evercore ISI’s advice to clients to buy the dip from the previous week.

In other news, Merck & Co announced its acquisition of Harpoon Therapeutics for $680 million, bolstering its oncology portfolio with the addition of immunotherapies. This move was prompted by the impending patent expiration of its blockbuster drug Keytruda. The offer of $23 per share in cash for Harpoon represented a significant 118 per cent premium over the stock’s recent closing price.

Boeing has experienced a sharp decline in its share price of 8 per cent following the temporary grounding of several Boeing 737 Max 9 aircraft for inspections after an Alaska Airlines fuselage section blew out.

As a result of lift in tech stocks, Technology sector was the best performer overnight, surging by 2.75 per cent. Energy was the only sector in the red.

Meanwhile, asset managers were engaged in a fee competition regarding potential US Bitcoin ETFs. BlackRock proposed a 0.2 per cent fee for the first year or until assets reach $5 billion, while Ark Investment Management offered fee waivers for the initial six months or until assets hit $1 billion, ultimately settling at 0.25 per cent. Invesco, on the other hand, planned to waive fees for six months or the first $5 billion before settling at 0.59 per cent, pending a decision from the US SEC for possible rapid fund launches.

This week, traders were eagerly awaiting more clarity on the Federal Reserve’s rate cut strategy. The release of the December consumer price index on Thursday, followed by the producer price index on Friday, was expected to shed light on whether the central bank’s efforts to bring inflation down to its 2 per cent target were bearing fruit.

In the commodities market, US crude oil prices took a hit, dropping by over 4 per cent on Monday. This decline was triggered by Saudi Arabia’s decision to lower prices for its primary crude product, raising concerns about weakening global demand. Saudi Arabia’s move was aimed at safeguarding its market share in the face of increased US production and competitively priced oil from Iran and Russia.

Additionally, the LNG (liquefied natural gas) market was bracing for a substantial supply wave that could lead to a significant price drop of up to 47 per cent by 2027, according to forecasts from Bernstein Research. This shift in the market dynamics was driven by reduced output from ageing LNG plants in Australia, once a major exporter, and the United States emerging as the world’s largest LNG exporter.

Zimbabwe faced a 15 per cent decline in gold production in 2023, with output totaling 30 metric tons. This decline was primarily attributed to electricity shortages and currency instability. Gold producers grappled with challenges arising from currency devaluation and power cuts caused by ageing coal-fired plants, resulting in production falling short of the government’s target of 40 metric tons for the year.

The SPI futures are pointing to a 1.1 per cent gain.

Currency

One Australian dollar at 8:50 AM was buying 67.19 US cents.

Commodities

Gold has lost 0.74 per cent. Silver is flat. Copper has gained 0.49 per cent. Oil has lost 3.97 per cent.

Figures around the globe

European markets closed higher yesterday. London’s FTSE gained 0.06 per cent, Frankfurt gained 0.74 per cent, and Paris closed 0.4 per cent higher.

Asian markets were closed.

Yesterday, the Australian share market closed 0.5 per cent lower at 7,451.55.

Ex-dividends

One company is going ex-dividend. Katana Capital (ASX:KAT) is paying 0.5 cents fully franked.

Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.

Disclaimer

The views, opinions or recommendations of the commentators in this presentation are solely those of the author and do not in any way reflect the views, opinions, recommendations, of Sequoia Financial Group Limited ABN 90 091 744 884 and its related bodies corporate (“SEQ”). SEQ makes no representation or warranty with respect to the accuracy, completeness or currency of the content. Any prices published are accurate subject to the time of filming and shouldn’t be relied upon to make a financial decision. Commentators may hold positions in stocks mentioned and companies may pay FNN to produce the content at times. The content is for educational purposes only and does not constitute financial advice. Independent advice should be obtained from an Australian Financial Services Licensee before making investment decisions. To the extent permitted by law, SEQ excludes all liability for any loss or damage arising in any way including by way of negligence.