The ASX is poised for a subdued start to the week, with ASX 200 futures dipping 0.3% to 8,296 points. The decline follows a mixed performance on Wall Street on Friday, driven by a robust US retail sales report and comments from Federal Reserve officials casting doubt on the likelihood of a December interest rate cut.
The ASX 200 ended last week down 9 points (-0.12%) at 8,285, a respectable outcome considering losses over the first three sessions.
Two dominant factors continue to weigh on the index: the 'Trump Trade', marked by tariffs and a stronger US dollar, and market disappointment following China’s recent underwhelming stimulus measures. These trends present ongoing challenges, particularly for commodities and resource stocks.
At the sector level, Materials (-5.56%), Consumer Staples (-2.66%), Health Care (-2.45%), and Energy (-2.14%) led the declines. In contrast, IT (+4.63%), Utilities (+3.42%), Real Estate (+2.74%), and Consumer Discretionary (+2.70%) posted the strongest gains.
Individual stock movements highlighted significant divergence. Paladin Energy (-25%), Nuix (-19.08%), Deep Yellow (-13.64%) and Mineral Resources (-12.84%) experienced double-digit losses, while James Hardie (+16.59%), Block (+15.01%), Tyro Payments (+13.33%) and Appen (+12.70%) saw notable gains, drawing investor applause.
“This week's key event on the local data calendar is the Minutes from the Reserve Bank of Australia (RBA)'s November Board meeting, where it kept rates on hold at 4.35% for an eighth consecutive meeting,” IG Markets analyst Tony Sycamore noted.
“In the statement accompanying the 'on-hold' decision, the RBA noted that while higher interest rates were working to bring demand and supply closer to balance, underlying inflation (as represented by the trimmed mean) at 3.5% is “Still some way from the 2.5 per cent midpoint of the inflation target.”
“While the statement's tone was hawkish, the press conference that followed sounded more balanced (as it did after the September Board meeting). The RBA Governor noted that current pricing in the rates market is ‘reasonably on message’.
“The meeting minutes will likely sound balanced with traders scanning for more details around scenarios where monetary policy might need to be held restrictive for a prolonged period or tightened further. And scenarios in which future financial conditions might need to be less restrictive than they are at present. For example, if the labour market weakened more sharply than forecast or inflation fell more rapidly.
“As we approach the home stretch of 2024, the Australian rates market is pricing in just a 10% chance of an RBA rate cut before year-end, with a first 25 basis-point reduction from the RBA not expected until May 2025.”
Hawkish comments send US markets lower
US stocks closed significantly lower on Friday following hawkish comments from Federal Reserve chair Jerome Powell, who emphasised that the central bank is not “in a hurry” to cut interest rates, citing the robust job market and inflation remaining above target.
For the week, the Nasdaq fell 3.4%, the S&P 500 dropped 2.8% and the Dow Jones Industrial Average declined 1.2%.
Adding to market unease was the release of mixed October retail sales data. Headline retail sales rose 0.4% for the month but the retail control group, which factors into GDP calculations, fell by 0.1%.
Reflecting the increased uncertainty, the US rates market now prices a 60% chance (15 basis points) of a December Federal Reserve rate cut, down from 82% earlier in the week.
The upcoming week is light on US economic data with key releases including manufacturing and services Purchasing Managers’ Index (PMI) figures and housing market updates on building permits, housing starts, and existing home sales.
Market attention will also focus on Nvidia Corporation’s third-quarter fiscal 2025 earnings, due Thursday morning Sydney time. Nvidia is expected to surpass earnings estimates for the fifth consecutive quarter, with analysts forecasting earnings per share of US$0.72 on revenue of US$32.1 billion. The report will be closely watched given Nvidia’s leading role in the artificial intelligence chip market.
“Earlier this month, the share price of Nvidia, which started the year below $50, hit a fresh record high of $149.77 before finishing last week at $141.98. If Nvidia’s earnings beat expectations, there is a good chance we will see its share price surge above $150 in the sessions ahead,” Sycamore noted.
“Conversely, a disappointing earnings report should see its share price drop quickly back towards support at $130.00. Nvidia's substantial influence on the S&P 500 and Nasdaq 100 means its results will also influence market sentiment towards tech stocks and the broader market. Strap in it’s going to be a big one!!”
European sharemarkets closed lower on Friday.
Europe’s performance was led by a sharp decline in healthcare stocks, which fell 2.9%. Novo Nordisk (NYSE:NVO) dropped 5.3%, Sanofi declined 3.3% and GSK slid 3.9%, amid market reactions to Robert F. Kennedy Jr.'s appointment in the United States.
- The pan-European FTSEurofirst 300 index lost 0.8% on the day and 0.7% for the week.
- In London, the FTSE 100 index dipped 0.1% on Friday and recorded a 0.1% weekly decline, marking its fourth consecutive weekly loss.
Currencies and commodities
Currencies
In currency markets, movements were mixed against the US dollar.
- The Euro declined from US$1.0592 to US$1.0518, trading near US$1.0540 by the US close.
- The Australian dollar eased from US$0.6479 to US$0.6443, ending near US$0.6460.
- The Japanese yen strengthened from 156.49 yen to JPY153.86, closing at JPY154.35.
Commodities
Global oil prices fell over 2% on Friday due to concerns about weaker Chinese demand and uncertainty over the pace of potential US Federal Reserve rate cuts.
- Brent crude dropped US$1.52 (2.1%) to US$71.04 per barrel.
- US Nymex crude fell US$1.68 (2.4%) to US$67.02 per barrel.
- For the week, Brent lost 3.8%, while Nymex declined 4.8%.
Base metals were mixed.
- Copper futures slipped 0.5%, while aluminium surged 5.7% following China’s decision to cancel export tax rebates, sparking concerns about reduced export flows. Weekly performance saw copper fall 5.5% and aluminium edge up 0.2%.
- Gold futures fell US$2.80 (0.1%) to US$2,570.10 an ounce on Friday as a stronger US dollar pressured prices. Spot gold ended near US$2,561 an ounce, capping its largest weekly decline in over three years, down 4.6%.
- Iron ore futures dipped US$0.59 (0.6%) to US$101.63 per tonne, their lowest level in nearly two months, as concerns about China's property sector, stronger supply, and seasonal demand declines weighed on prices. The metal fell 2.1% for the week.
What about small caps?
The S&P/ASX Small Ordinaries finished 0.45% higher on Friday to 3,123.00, however, it was down 1.47% for the week.
While it has been a quiet start to the day on the news front, there have been some big announcements.
1. Forrestania Resources delivers high-grade rock chip values at Bonnie Vale
Forrestania Resources Ltd (ASX:FRS) has reported rock chip values of up to 222 grams per tonne (g/t) gold (Au) from its Bonnie Vale Project near Coolgardie in Western Australia’s Eastern Goldfields. The company is now awaiting assay results from its recent reverse circulation (RC) drilling program at the Ada Ann prospect.
2. Mako Gold directors recommend Aurum Resources offer
Mako Gold Ltd (ASX:MKG) has released its target’s statement, outlining reasons for shareholders and option holders to accept Aurum Resources Limited’s offer announced on 11 October 2024. The statement, issued on 14 November, provides detailed guidance from the Mako board regarding the proposed transaction.
3. Ionic Rare Earths advances Belfast manufacturing facility
Ionic Rare Earths Ltd (ASX:IXR, OTC:IXRRF), through its subsidiary Ionic Technologies, is progressing plans to establish a rare earth oxide (REO) manufacturing facility in Belfast, UK. A completed feasibility study highlights the project’s strong financial returns and environmental sustainability, positioning the company as a pioneer in a sustainable and sovereign UK/Europe supply chain for net-zero, advanced manufacturing, and defence applications.
4. Lanthanein Resources begins drilling at Lady Grey Project
Lanthanein Resources Ltd (ASX:LNR, OTC:FRNRF) has started drilling at its Lady Grey Project in Mt Holland, Western Australia. The program will target a conductor plate identified by a Moving Loop Electromagnetic (MLEM) survey. Initial plans involve three RC pre-collars to a depth of 150 metres, followed by diamond drilling to 600 metres.
5. Lightning Minerals identifies spodumene in Brazil
Lightning Minerals Ltd (ASX:L1M) has discovered spodumene-bearing pegmatite at its Esperança project in Minas Gerais, Brazil. The find bolsters the company’s exploration strategy and underscores the lithium prospectivity of the region, known as the 'Lithium Valley'.