Key takeaways:

• Rate-sensitive stocks were among the major movers this week as slowing inflation suggests the Fed’s job could be nearing an end

The lowest US inflation reading in more than two years sparked a reversal in local equities, which bounced off a three-month low thanks to the two strongest sessions since January.

Which shares excelled?

Megaport (ASX: MP1) was one of the major talking points on Tuesday after the connectivity services provider upgraded its earnings guidance. Thanks to lower costs, the company said that it expects earnings between $19 million and $21 million for the financial year that just came to a close, which compares favourably with the prior guidance of between $16 million and $21 million. 

Another positive development was news that Megaport achieved a net cash positive result in the fourth quarter of the financial year, which has allowed it to cancel its $25 million debt facility. Looking forward, management anticipates FY24 to be net cash flow positive, and earnings to come in above the previous range of between $41 million and $46 million, with an update due in August.

Gold stocks were among the major movers in recent days, with the precious metal rallying as the US dollar tumbled. The USD price of gold hit a three-week high directly after news of a sharp slowdown in consumer-price inflation, which is raising hopes the Federal Reserve could soon stop its rate hike campaign altogether. 

The entire gold cohort rallied on the news, led by the likes of Capricorn Metals (ASX: CMM), De Grey Mining (ASX: DEG), Bellevue Gold (ASX: BGL), Westgold Resources (ASX: WGX), Evolution Mining (ASX: EVN), and Resolute Mining (ASX: RSG).

The inflation data also underpinned a lift in copper prices, with the base metal rising from US$3.76 per pound to US$3.83 per pound. Copper prices are generally linked to views of the global economy, with the metal often regarded as a barometer for overall demand consumption. In light of that move, Sandfire Resources (ASX: SFR) was among the top performing stocks this week.

Netwealth’s (ASX: NWL) update for June sparked gains in the wealth management platform’s share price, while also supporting buying activity in rival Hub24 (ASX: HUB). The company reported that funds under administration (FUA) increased by $4.4 billion in the June quarter to $70.3 billion, with the platform attracting net inflows of $3.2 billion. 

For the financial year, Netwealth’s funds under administration rose by 26.3%. Another tailwind for the company was the launch of its non-custodial administration service, which attracted $126 million in funds since being released in April.

Shareholders of GQG Partners (ASX: GQG) will be feeling optimistic after the US-based global asset manager showed a strong investment performance in its June-quarter update. Whereas a number of its peers have struggled of late, GQG has performed robustly, with group funds under management (FUM) up 5.7% month-over-month to US$104.1 billion. That result trumped the MSCI World Index, which rose just 2.6% across the same period. Net inflows for the June quarter were US$1.2 billion, and US$6.2 billion for the half.

Also lifting the market higher over recent trading sessions were Breville Group (ASX: BRG), Domino’s Pizza (ASX: DMP), SiteMinder (ASX: SDR), and Mesoblast (ASX: MSB).

Which shares dragged on the market?

Failing to take the strong lead from the rest of the market, Medibank Private (ASX: MPL) was among the week’s underperformers as shares in the private health insurer went backwards. Even after this week’s slip-up, the stock is trading approximately 15% higher year-to-date.

QBE Insurance (ASX: QBE) also recorded a modest loss this week, with the insurance giant’s shares sliding despite no price-sensitive news related to the business. Nonetheless, fresh inflation data in the US showed consumer price growth moderated more than expected, leading some to speculate that the Fed’s rate hike campaign could be nearly over. 

Insurers are among the stocks that tend to benefit when interest rates increase as it typically means bond yields rise and insurers can invest premiums at a higher yield and generate more investment income. With rates potentially nearing a peak, that could test the investment thesis surrounding insurers. 

Another name on the outer was APM Human Services International (ASX: APM). The last news released by the company was at the end of May when the business reported a new contract win in the United Kingdom. Since then, the company’s shares have traded markedly higher, albeit this latest pull-back could be a sign of profit taking.

We’ll be back next week with another Weekly ASX Trading Wrap Up – until then, have a great week!