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UBS anticipates the Australian dollar (AUD) will appreciate against the US dollar (USD) due to favorable growth prospects in Australia and China, alongside a supportive rate environment. The firm recommends long positions in AUD, particularly against the New Zealand dollar, while advising caution regarding potential US tariffs that could temporarily weaken AUD/USD below 0.60.
UBS forecasts a rise in the AUD/USD exchange rate, driven by a dovish interest rate environment and stronger-than-expected economic growth in Australia and China. The bank suggests long positions in AUD/NZD and selling downside risk on AUD/USD, while cautioning that US tariffs could pose significant risks, potentially pushing the exchange rate below 0.60.
National Australia Bank (NAB) reported a 2% decline in quarterly cash earnings to $1.74 billion, impacted by lower net interest margins and increased competition, alongside rising credit impairment charges of $267 million. Meanwhile, Goodman Group raised $4 billion to expand in logistics and data centers, achieving an 8% rise in operating profit to $1.2 billion. Mineral Resources has halted dividend payments to focus on the Oslo iron project and debt reduction, with revenue down 9% to $2.3 billion due to falling commodity prices.
Riversgold Ltd has secured an 80% interest in the Kalgoorlie Gold Project’s Northern Zone after exceeding the A$600,000 exploration expenditure requirement. The company plans to advance drilling and convert the tenement into a Mining Lease, with a drill rig mobilizing next month for the 2025 exploration program. Initial findings indicate a significant gold system, with metallurgical testing showing a recovery rate of 92.9%.
UBS Wealth is focusing on global AI stocks, particularly in China, as the Hang Seng Technology Index surges over 30% in a month. The firm anticipates significant capital expenditure increases from US tech giants and bullish trends in China's corporate earnings due to AI advancements. Additionally, UBS is optimistic about mid-cap European shares and broader Asian markets, excluding Japan, amid expected economic stimulus.
The Aussie dollar's strength indicates market confidence despite dovish signals from the RBA, while spot gold prices rise over 1% amid global economic growth concerns. Crude oil prices are also trending higher due to supply disruptions in Russia and the US. In the stock market, the ASX 200 is pulling back after recent highs, with traders monitoring support levels between 8350 and 8370. Meanwhile, the Nasdaq 100 remains above 20,000 but faces challenges as major tech companies experience pullbacks, with resistance levels between 22,000 and 22,200 being critical for its momentum.
AUD/USD remains strong following a 25 basis point rate cut by the RBA, now targeting the $0.6850 region with support at $0.6330. In contrast, EUR/JPY and USD/JPY are under pressure, with USD/JPY hovering above key support levels after a rejection by the 55-day SMA.
UBS has upgraded Evolution Mining's rating to Neutral from Sell, raising the price target to A$6.50, citing strong production and cost management. The company has shown impressive financial health with a 60.5% revenue growth and a gross profit margin of 32.2%, despite being one of the more expensive gold stocks. Recent performance has exceeded expectations, contributing to a significant share price return of 100.5% last year.
The ASX 200 fell 46 points (-0.55%) to 8490, despite the RBA's first interest rate cut since November 2020, which was anticipated due to a decline in inflation. The financial sector faced declines, with Westpac down 2.22%, while the technology sector showed gains, led by Zip Co's 3.06% increase. Key economic data will be monitored ahead of the RBA's next meeting in April.
UBS has upgraded Charter Hall Retail Reit (CQR) to 'Buy' from 'Neutral' following the acquisition of Hotel Property Investments (HHPI), despite lowering the price target to A$3.69 from A$3.79 to better align with peers. CQR shares rose 3% to A$3.48, with 5 of 7 analysts rating the stock as "buy." However, the stock experienced a decline of 12.7% in 2024.
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