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US equities closed in the red in New York overnight, with the Dow Jones closing 0.6% lower and the S&P500 slightly down 0.2%, as industrials and financials led seven of the eleven industry sectors lower. The Nasdaq was down only 0.09%. US markets eased after Friday’s broad-based rally.

In Europe, markets also closed lower as investors digested the US debt ceiling agreement and euro zone inflation data, which showed inflation falling to its lowest level since February 2022. The STOXX 600 closed 0.5% in the red, following muted trading for most of the trading session. Oil and gas stocks were down the most, despite oil prices remaining in positive territory. Travel and leisure stocks were also lower.

What to watch today:

• The SPI futures are suggesting that our local market will drop 0.57% at the open this morning, following the broad decline across global markets overnight.
• In economic news today, the RBA will announce its cash rate decision. The consensus is that central bank will hold the cash rate at 3.85% this month. The GDP growth rate is not announced until tomorrow, so that may be contributing to the market expectations, waiting to see what GDP comes in at before announcing further hikes.
• And in commodities,
  • Oil prices were trading more than 1% higher, as expectations of lower supply outweighed concerns over slowing demand.
  • Gold is in the green following a modest weakening of the US dollar and a slight decline in US Treasury yields. This followed weak eco data in the US that reinforced the view that the Fed will pause the tightening cycle next week.
  • And iron ore is also higher, recovering after hitting a 6-month low.

Trading Ideas:

• Bell Potter maintains a buy rating on Bega Cheese (ASX:BGA) after reviewing Bega opening farmgate agreements across all geographics, to derive a net movement in estimated FY24 farmgate costs relative to FY23 estimates. Bell Potter’s price target remains unchanged at $4.10, and at BGA’s current share price of $3.59, this implies 14.2% share price growth in a year.
• Bell Potter also maintains a Speculative buy rating on Frontier Digital Ventures (ASX:FDV) following an amended Subscription Agreement regarding the acquisitions of FDV portfolio companies and InfoCasas. They have lowered their valuation from $1.05 to $0.89, and at the stock’s current share price of $0.36, this implies 147.2% share price growth in a year.