Australian shares are set for yet another good day, with ASX futures pointing to a 0.7% or 53-point lift, to 8,168 points, when trading begins in the next hour.
All eyes are on the Fed in the US – and let’s face it, everywhere else – which is on course to slash interest rates when it meets on Thursday, if most analysts are to be believed.
US rate cut on the cards
Market expectations for a half-point interest rate cut are growing, prompting shifts towards economically sensitive sectors and away from the perceived safety of big tech stocks.
Accordingly, US sharemarkets were mixed yesterday, with traders slipping out of technology megacaps but still putting their money into more traditional stocks.
The Dow Jones rose 0.5% to 41,622 points, while the S&P 500 inched up 0.1% to 5,633 points and the tech-heavy Nasdaq dipped 0.5% to 17,592 points.
The S&P 500’s financial and energy sectors led gains, both up 1.2%.
Intel surged 6.4% following reports of eligibility for up to US$3.5 billion in federal grants for semiconductor production for the US Department of Defence.
Apple shares dropped 2.8% after weaker-than-expected demand for its iPhone 16 models. This sentiment also impacted chipmakers like Nvidia, which slipped 2%.
Boeing felt a 0.8% decline upon announcing hiring freezes and potential furloughs due to an ongoing workers’ strike.
In Europe it was a relatively flat day, with its tech sector also down 1.2% following Apple’s performance.
Meanwhile, the retail sector saw a 3.1% boost from H&M. The FTSE 100 in London rose 0.1%, with automobile stocks leading gains.
Currencies and commodities
Currencies were mixed against the US dollar in European and US trade on Monday.
The Euro rose from US$1.1097 to US$1.1135, closing near US$1.1130. The Australian dollar firmed from US$0.6719 to US$0.6753, stabilising at US$0.6750 at the US close.
Meanwhile, the Japanese yen weakened from 139.59 yen per US dollar to JPY140.90, closing near JPY140.60.
Global oil prices rose around 2%, as nearly 20% of crude oil production and 28% of natural gas output in the Gulf of Mexico remained offline due to Hurricane Francine. Brent crude increased by US$1.14 or 1.6% to US$72.75 a barrel, while the US Nymex crude price gained US$1.44 or 2.1% to settle at US$70.09 a barrel.
Base metal prices climbed, buoyed by a weaker US dollar. Copper futures rose 0.9%, and aluminium surged 2.4% as inventories on the London Metal Exchange fell to an 18-week low of 820,850 tonnes.
Gold futures edged lower by US$1.80 or 0.1% to US$2,608.90 an ounce. But spot gold traded near US$2,582 an ounce at the US close after hitting an all-time high of US$2,589.59, supported by the weakening US dollar and expectations of a significant rate cut by the Federal Reserve later this week.
Iron ore futures dipped US$0.32 or 0.3% to US$91.94 a tonne after Goldman Sachs reduced its fourth-quarter price forecast by US$15 to US$85 a tonne, citing concerns over market oversupply.
On the horizon, Australia will release weekly consumer confidence data, Webjet will host an investor meeting, and Cochlear shares will trade ex-dividend.
Meanwhile, China’s financial markets will be closed for a public holiday, and the US will release retail sales, industrial production and business inventories data, along with the NAHB housing market index.
What’s happening in small caps?
- International Graphite Ltd (ASX:IG6) (International Graphite Ltd (ASX:IG6)) says its Collie graphite processing and R&D facility in Western Australia has achieved independent quality assurance accreditation.
- Piedmont Lithium (ASX:PLL, OTC:PLLTL) Ltd has cleared environmental approvals in Ghana to proceed with the Ewoyaa Lithium Project.
- Antipa Minerals Ltd (ASX:AZY) has delivered a mineral resource estimate (MRE) for its 100% owned Minyari Dome Gold-Copper Project in the Paterson Province of Western Australia.
- Astral Resources NL (ASX:AAR) has fielded metallurgical test results for Hestia, Eos and Iris, part of the 100%-owned Mandilla Gold Project some 70 kilometres south of Kalgoorlie in Western Australia.