Morning Wrap: ASX to rise ahead of holidays as investors return to US tech stocks

The Morning Wrap wraps up today and will return on Monday, 6 January 2025. Thank you for your support, and we wish you and your families a Merry Christmas and happy holidays!

The ASX is set to rise as the NASDAQ edges closer to its record high, rebounding from last week’s sell-off as investors return to tech stocks. Leading the charge were key AI players like NVIDIA, Broadcom, Advanced Micro Devices, and Microchip Technology, which jumped 3.7–5.5%.

Economists will be focused on the RBA’s December 2024 meeting minutes, due at 11:30 AM. As one of the few central banks yet to cut rates, the minutes will hopefully provide additional insights into the RBA’s monetary policy outlook for 2025.

In broker updates, Mesoblast (ASX: MSB) has been downgraded, while IDP Education (ASX: IEL) has been upgraded (details below).

Don't forget about holiday trading hours! With the ASX closing early at 2:10 PM (Sydney time) today, and closed on Christmas, Boxing Day, and New Year’s Day (plus early closure again at 2:10 PM on 31 December), it’s the perfect excuse to spend time with family, catch up with friends, or even hit the waves while the markets take a breather.

S&P 500 SESSION CHART

The Christmas spirit lifts the S&P 500 up 0.72%. (Source: TradingView)

OVERNIGHT MARKETS

• US equities ended near best levels as S&P 500 and Nasdaq both extended Friday's gains.

• Big tech and semiconductor outperformance the story for an otherwise uneventful session.

• Upward pressure on yields and dollar may be an overhang on sentiment around a rotation into value stocks.

STOCKS

• Merger-arb investors hope Trump will help revive the strategy that has been a recent underperformer (Bloomberg)

• Strategists mostly aligned in prediction that 2Y yields will fall in 2025 as Fed continues cuts (Bloomberg

• Tesla, Meta, Broadcom to see Nasdaq 100 weighting fall in annual rebalancing (Bloomberg)

• Microsoft may integrate additional internal, third party AI models beyond OpenAI into 365 Copilot (Reuters)

• Nordstrom family and Liverpool to take Nordstrom private in $6.25B deal (CNBC)

CENTRAL BANKS & ECONOMY

• BoC minutes show decision to cut by 50 bp was a close call as some suggested slower, patient pace (Bloomberg

• Next year's FOMC voting member composition could mean more dissents with wider dispersion of views from the center (Bloomberg)

• Eurozone faces muted growth prospects for 2025, with economists recently downgrading forecasts to 1% expansion from an earlier 1.2% estimate, partly due to more investment flows going to the US (Bloomberg).

GEOPOLITICS

• US launches probe into alleged anti-competitive measures by China to support its chips industry (FT)

BROKER MOVES

• Jefferies downgrades Mesoblast (ASX: MSB) to HOLD but raises its price target to $2.30, implying ~9% downside.

• Jefferies upgrades IDP Education (ASX: IEL) to HOLD while lowering its price target to $11.80.

Economic calendar (AEDT):

• Today: RBA December 2024 meeting minutes released at 11:30AM (Sydney time)

• Friday: US publishes unemployment claims data at 11:30PM (Sydney time)