Wall Street rallied on the first trading day of the new week as investors now believe it is more likely for presidential candidate Donald Trump to reclaim the White House at the upcoming election following a failed assassination attempt of the former president over the weekend. The rally was also boosted by strong corporate results out as we near earnings season, with key banks including Goldman Sachs and BlackRock both beating profit expectations in results out overnight. The Dow Jones closed at a second consecutive session record with a rise of 0.4% on Monday, the Nasdaq also added 0.4% and the S&P500 ended the day up 0.3%.

Over in Europe, markets closed lower on Monday as investors digested some disappointing earnings results released on Monday. The STOXX 600 fell 1% as every sector ended the day in the red, while Germany’s DAX dropped 0.84%, the French CAC fell 1.19% and, in the UK, the FTSE100 ended the day down 0.85%. Shares in luxury brand Burberry plunged 16% after the company posted disappointing Q1 results including the axing of its dividend, while Swatch Group also dropped 9.8% as profits fell amid easing sales in China.

Across the Asia markets on Monday, it was a mixed session as investors assessed key economic data out in the region. China’s CSI index rose 0.11%, South Korea’s Kospi index fell 1.73%, and Japan’s Nikkei was closed for a public holiday.

China’s economic outlook took another hit yesterday with the world’s second largest economy reporting its worst pace in economic growth in five quarters with a GDP data showing expansion of 4.7%, down from the 5.3% reported in Q1 and well below economists’ expectations of a 5.1% reading. Weak domestic demand, falling yuan, persistent property downturn and trade tensions were the key drivers of the eased economic expansion. China’s retail sales for June also came in lower than expected with a 2% gain YoY compared with expectations of 3.3%.

The local market started the week with a modest gain of 0.73% to close with a fresh record of 8017.60 points with every sector ending the day in the green led by the tech sector jumping 1.4%. The broad market rally yesterday was driven by Wall Street’s record run that ended last week on a high note.

Aussie Broadband tumbled 14% on Monday after the company lowered its earnings guidance for FY25, while Lifestyle Communities tanked 18% on the back of a news report featuring residents of the company’s properties outlining alleged immoral and unethical conduct.

Star Entertainment shares lost 1% after the casino operator reported it has been forced to pause its electronic game rollout due to issues with the software.

What to watch today:

• Ahead of Tuesday’s trading session here in Australia the SPI futures are anticipating the ASX to open the day down 0.05%
• On the commodities front this morning, oil is trading 0.45% lower at US$81.84/barrel, gold is up 0.41% at US$2421/ounce and iron ore is flat at US$109.58/tonne.
• The Aussie dollar is buying US$0.68, 106.92 Japanese Yen, 52.19 British Pence and NZ$1.11.

Trading Ideas:

• Bell Potter has maintained a hold rating on Nanosonics (ASX:NAN) and have increased the price target on the healthcare equipment and services company from $3 to $3.45 following the release of a trading update out of the company yesterday. Nanosonics outlined it expects revenues at the upper end of guidance and operating expenses to growth also within the specified range of 9-11%.
• And Trading Central has identified a bullish signal on Step One Clothing (ASX:STP) following the formation of a pattern over a period of 36-days which is roughly the same amount of time the share price may rise from the close of $1.47 to the range of $1.64 to $1.70 according to standard principles of technical analysis.

Wall Street re-entered record territory on Friday after a slight pullback on Thursday following the release of positive inflation data earlier in the week and as investors looked outside of the AI rally to capitalise on attractive investment opportunities across the broader market. The Dow Jones rose 0.62% to top 40,000 for the first time ever, while the S&P500 and Nasdaq rose 0.55% and 0.63% respectively. The banks fell on Friday despite posting stronger results than expected with JPMorgan shares sliding 1.2% despite topping Q2 revenue expectations and Citi fell 1.8% also despite beating on the top and bottom lines in Q2.

Over in Europe, markets closed higher across the region on Friday with the STOXX 600 rising 0.97% driven by telecom stocks after strong second quarter results boosted stocks in the sector. Germany’s DAX rose 1.15% on Friday, the French CAC added 1.27% and, in the UK, the FTSE100 ended the day up 0.36%.

Across the Asia markets on Friday, it was a mixed finish to the week across the region with Japan’s Nikkei falling over 2% after hitting record highs in the previous sessions. Hong Kong’s Hang Seng rose 2.6%, South Korea’s Kospi index fell 1.18%, and China’s CSI index rose 0.12% after Chinese exports beat expectations with a rise of 8.6% YoY in June indicating further recovery in the region post-pandemic.

Locally on Friday the ASX200 rose 0.88% to a record close with every sector aside from the tech sector ending the day higher, led by real estate stocks jumping almost 2%. The price of gold topped US$2400 late last week which boosted local gold miners including Bellevue Gold (ASX:BGL) rising 1.5%, Spartan Resources (ASX:SPR) soaring over 7% and Gold Road Resources (ASX:GOR) jumped 2.3%. The easing inflation data out of the US was the key driver of the gold price rally as markets are now pricing in a rate cut out of the Fed by September. The local big banks rallied on Friday with Commonwealth Bank (ASX:CBA) closing the day at a record $131.60 taking its market cap to $221bn, making it the largest company on the ASX.

What to watch today:

• Ahead of the first trading session of the new trading week the SPI futures are anticipating the ASX to open the day up 0.64% on the back of Wall Street’s strength on Friday.
• On the commodities front this morning oil is trading 0.15% higher at 82.34 per barrel, gold is down 0.16% at US$2,407 an ounce and iron ore is flat at US$109.58 per tonne.
• The Aussie dollar has strengthened again to buy 68 US cents, 107.14 Japanese Yen, 53.04 British Pence and 1 New Zealand dollar and 11 cents.

Trading Ideas:

• Bell Potter has increased the 12-month price target on Coventry Group (ASX:CYG) from $1.80 to $2.00 and maintain a buy rating on the industrial supplies and services group following the release of a strong trading update out of the company for Q4 including group sales growth of 4% and the outlook for FY24 EBITDA of 22% growth on FY23.
• Trading Central has identified a bullish signal on IGO Ltd (ASX:IGO) following the formation of a pattern over a period of 16-days which is roughly the same amount of time the share price may rise from the close of $6.07 to the range of $6.47 to $6.57 according to standard principles of technical analysis.

The S&P 500 has notched seven consecutive record highs, fueled by investor optimism over AI advancements. Apple's ascent to the top of the market cap rankings underscores the technology sector's dominance. However, with valuations stretched, questions arise about the sustainability of this rally. This week's market update explores the driving forces behind the record-breaking surge and assesses potential investment opportunities.

In this video, Grady covers:

• (0:15): what’s behind the S&P500 hitting 7 consecutive record highs
• (0:33): why Apple overtook Nvidia as the most valuable company
• (0:58): how Ai optimism is driving the tech sector surge
• (4:59): how the ASX200 has performed this week so far
• (6:23): the most traded stocks & ETFs by Bell Direct clients
• (6:39): economic data to watch out for next week.