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Wall Street’s record rally run continued from Monday with the S&P500 up 0.25% to a fresh record, while the Dow Jones added 0.2% to a record close and the Nasdaq added 0.56%, led by AI market darling Nvidia rallying 4%. Investors shook off recent worrying economic data including US manufacturing PMI data hitting the lowest level in 15-months for August, and consumer confidence falling to 98.7 points for September, to extend the recent equity rally on the back of the Fed’s 50 basis point rate cut announcement late last week.
In Europe overnight markets closed higher in the region led by stocks exposed to China following Beijing’s announcement of a range of policy measures easing in a bid to stimulate the economy. The STOXX600 rose 0.6%, while Germany’s DAX added 0.8%, the French CAC rose 1.28% and, in the UK, the FTSE100 ended the day up 0.28%.
The local market fell 0.13% on Tuesday, extending the weekly decline after the RBA held interest rates higher for longer. Rate sensitive tech stocks came under pressure on Tuesday as a higher interest rate environment makes debt levels more costly, thus blowing out the profitability runway for high growth companies.
The RBA held Australia’s cash rate at 4.35% for the next period as was widely expected with commentary out of Australia’s central bank signalling the most recent projections for inflation in Australia indicate that it will be some time yet before inflation substantially hits the target 2-3% range. Without inflation taming to the target 2-3%, the RBA’s elevated rate of 4.35% will continue to hurt earnings for companies with higher input costs and subdued demand due to a high cost of living environment for all Australians.
The RBA’s rate decision boosted the Aussie dollar to a 2024 record high against the greenback of 68.84 US cents.
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