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Wall Street started the second half of the US financial year with a green close that saw the Nasdaq settle the day at a fresh record high as positive momentum from the first half extends into the second half. The Dow Jones rose 0.13%, the S&P500 added 0.27% and the tech heavy Nasdaq rose 0.83% to a fresh record close of 17,879.30. US Manufacturing PMI data out this morning showed a slight contraction in manufacturing output for June to 48.5 from 48.7 in May, with the reading falling short of economists’ expectations of 49.1 points indicating the US economy continues to ease under the high interest rate environment.

Across the European markets overnight, it was a sea of green as investors responded to the first round of France’s snap parliamentary election. The STOXX600 rose 0.44%, Germany’s DAX added 0.3%, and in the UK, the FTSE100 ended the day up 0.03%. The French CAC rallied 1.09% on Monday as investors digested the results of the first round of France’s legislative election where Marine Le Pen’s party won the first round by a smaller margin than expected. The rally comes as investors welcome to smaller margin win, as, if the party dominated to form a majority quickly, concerns are raised over the fast ability of their proposals in spending and tax to be pushed through quickly thus potentially tipping the region into a debt crisis.

Across Asia on Monday, it was a positive start to the second half of the year as investors assessed key economic data out in the region including China’s manufacturing activity and Japan’ consumer confidence readings. Japan’s Nikkei rose 0.12% on Monday while Japan’s broad index the Topix climbed 0.52% to a new 34-year high. China’s CSI index rose 0.48% on Monday and South Korea’s Kospi index ended the day up 0.23%. China’s Caixin manufacturing PMI figures rose to 51.8 points in June from 51.7 points in May, in a sign of ongoing recovery in the region, while Japan’s consumer confidence rose to 36.4 points in June from 36.2 points in May.

What to watch today:

• The local market started the new financial year 0.22% lower as investors reacted to key inflation data out in the US and Europe late last week and ahead of the RBA meeting minutes out locally today. The rate-sensitive tech sector took the biggest hit yesterday with a decline of 2.2% as investors took profits from the sector’s stellar rally over the last 12-months and ahead of a potential rate rise or prolonged hold out of the RBA.
• Gas producer Strike Energy tumbled over 16% yesterday after providing an update on the status of its West Erregulla gas supply agreement with Wesfarmers. Due to delays in receiving environmental approvals and the subsequent delays to the company’s final investment decision, the firm gas supply agreement has reverted to the original option for gas supply that is condition on Strike taking FID on a commercial project.
• Coronado Global Resources soared 9% on Monday though as investors see an attractive buy opportunity in the coal producer on news that its closest competitor, Anglo American has halted operations at its Queensland mine due to a fire burning underground in a major coal mine owned by the company.
• On the commodities front this morning oil is trading 2.3% higher at US$83.42/barrel, gold is up 0.1% at US$2328.73/ounce and iron ore is flat at US$106.51/tonne.
• 1 Aussie dollar is buying 66 US cents, 107.39 Japanese Yen, 52.66 British Pence and 1 New Zealand dollar and 10 cents.
• Investors locally will be eagerly awaiting the release of Michele Bullocks’ latest RBA meeting minutes out today to gain insight into the rate outlook down under. The last minutes and comments out of the RBA were taken as hawkish so it is unlikely Ms Bullocks’ stance will change given inflation drivers remain stubbornly high. Australian retail sales and building approvals data are set for release on Wednesday which will give further insight into the stickiness of key inflation drivers over the past month.
• Ahead of Tuesday’s session on the local market the SPI futures are expecting the ASX to open the day down 0.31%, not taking lead from Wall Street’s rally overnight.

Trading Ideas:

• Bell Potter has slightly decreased the 12-month price target on Cobram Estate Olives (ASX:CBO) from $2.10 to $1.95 and maintain a hold rating on the vertically integrated olive oil producer and marketer, following the release of an FY24 update including CBO’s Australian harvest coming in below forecasts, third party oil sourced and producing fall short of Bell Potter forecasts and the potential impacts of the re-emergence of La Nina.
• Bell Potter has decreased the rating on DGL Global (ASX:DGL) from a buy to a hold rating while also decreasing the 12-month price target from 75cps to 65cps on the specialty chemicals and logistics company following the assessment of some key operational indicators for the company. Bell Potter’s analyst sees despite tailwinds continuing to present in ag-chem, from a top-down point of view Bell Potter believes trading conditions remain challenging to other parts of the business including the environmental solutions division following a price increase from suppliers.