The ASX is set to rise this morning despite the Labour Day holiday in Western Australia shutting down that state. ASX 200 futures are up 0.6% to 8,180 points in early morning trading.
The ASX200 closed 123 points lower last week, down 1.49% to 8,172. After reaching a record high of 8,615 in mid-February, the index fell 4.22% in February, erasing much of January’s 4.22% gain. A weak offshore lead and earnings disappointments contributed to the decline.
At a sector level, Information Technology (-12.28%), Real Estate (-5.73%), Materials (-5.31%) and Consumer Discretionary (-2.43%) were the weakest performers. Meanwhile, Utilities (+4.31%), Financials (+1.89%) and Energy (+0.78%) were the only sectors to post gains.
“With reporting season now in the rearview mirror, the main drivers of the ASX200 in the months ahead will be developments around US tariffs and trade policy and the rapidly approaching Federal Election (due May 17)," notes IG Markets analyst Tony Sycamore. "As well as economic updates to provide insights around the timing of the RBA’s next rate cut, including this week's Q4 GDP update, which is previewed below.
“Australian GDP increased by 0.3% in the September quarter of 2024 for an annual rate of 0.8%. Per capita GDP growth decreased by 0.3% quarter-on-quarter, marking the seventh straight quarterly decline and the longest recorded stretch of negative growth, deepening the 'per capita recession'.
“The RBA’s statement of Monetary Policy released last month contained revised GDP forecasts for the Australian economy. GDP for December 2024 was lowered to 1.1% YoY from 1.5%. It then showed GDP rising to 2.4% YoY in December 2025, driven by lower interest rates, increased household consumption and strong public spending.
“As we await the final partial components for this week’s GDP print, the preliminary forecast is for a rise of 0.4% QoQ, lifting the annual growth rate to 1.2%.
"Ahead of the data, the Australian interest rate market is fully priced for a 25bp RBA rate cut in July and is pricing in a cumulative 56bp of RBA rate cuts for the remainder of 2025.
Rebound in the US
In the US, stock markets rebounded on Friday as inflation data aligned with expectations. However, geopolitical tensions heightened following a tense exchange between former US President Donald Trump and Ukrainian President Volodymyr Zelenskyy.
Despite Friday’s recovery, the Nasdaq fell 3.38% for its worst week since November, while the S&P 500 slipped 0.97%. The Dow Jones bucked the trend, rising 412 points (+0.95%).
On the economic front, headline Personal Consumption Expenditures (PCE) inflation for January rose 2.5% year-on-year, down from 2.6% previously. Core PCE inflation eased to 2.6% from a revised 2.9%, reinforcing expectations that inflation is gradually aligning with the US Federal Reserve’s target.
In equities, Nvidia recovered 3.97% to US$124.92 after Thursday’s 8.5% decline. Tesla ended a six-day losing streak, rebounding from its 200-day moving average of US$278 to close 3.91% higher at US$292.98. A sustained hold above this level could see Tesla’s share price trend towards the US$340-350 range.
Locally, Appen (-56.19%), Johns Lyng (-33.07%), Viva Energy (-29.3%) and Wisetech Global (-26.46%) had steep losses. Conversely, Helia (+27.03%), Pointsbet Holdings (+26.97%), Fleetwood Corporation (+19.00%) and AP Eagers (+17.66%) posted strong gains.
“Starting with the data, headline PCE inflation for January increased by 2.5% YoY, down from 2.6% prior. Core PCE inflation eased to 2.6% YoY in January from a revised 2.9%, reassuring the Fed that inflation is moving towards its target,” Sycamore wrote.
“While there was positive news on inflation, concerns about an economic slowdown were fuelled by a surprise fall in the Personal Consumption Expenditures (PCE) - essentially a measure of consumer spending. PCE fell by 0.2% in January following an upwardly revised 0.8% rise in December.
"This was the first decline since March 2023 and the largest decrease in nearly four years. The drop in consumer spending, coupled with a surge in imports, has led the Atlanta Fed’s GDPNow estimate for Q1 2025 GDP growth to plummet to -1.5% annualised from a +2.3% growth rate on February 19.
“This week, attention will shift to Friday's labour market update and given the current growth scare gripping markets, there is little room for disappointment. The expectation is for the US economy to add 150,000 jobs while the unemployment rate remains at 4%. The US rates market starts the week pricing in a full 25bp Fed rate cut for June and a total of 69bp of Fed rate cuts for the year."
Europe edges higher
European share markets edged higher on Friday, with mixed sector performances influencing the broader market. Technology stocks weighed on the pan-European index, dragging it down 1.5%, while utilities rose 0.8%. Mining stocks declined 0.7%, tracking weaker gold and copper prices, as a stronger US dollar and tariff concerns linked to former US President Donald Trump applied downward pressure.
- The FTSEurofirst 300 index ended flat but posted a 3.5% gain for February.
- In London, the FTSE 100 index rose 0.6% to a record closing high, extending its February gains to 1.6% after a 6% rise in January.
Currencies and commodities
Currencies
In currency markets, the Euro weakened against the US dollar, sliding from US$1.0419 to US$1.0360 before stabilising near US$1.0375 at the US close.
- The Australian dollar dipped from US62.21 cents to US61.91 cents, recovering slightly to US62.05 cents.
- The Japanese yen softened from JPY149.58 per US dollar to JPY150.98 before settling at JPY150.60.
Commodities
Global oil prices fell as traders monitored geopolitical tensions and policy developments.
- The Brent crude price declined by US86 cents, or 1.2%, to US$73.18 a barrel.
- The Nymex crude price shed US59 cents, or 0.8%, to US$69.76 a barrel, closing February 3.8% lower.
Base metal prices also retreated amid trade war concerns.
- Copper futures fell 1.4%, while aluminium futures lost 1.3%. Over the week, copper declined 1% and aluminium dropped 4.9%.
- Gold futures slipped US$47.40, or 1.6%, to US$2,848.50 an ounce, as the US dollar remained strong following in-line US inflation data. Spot gold traded near US$2,858 at the US close, with bullion losing 3.5% for the week.
- Iron ore futures edged down US17 cents, or 0.2%, to US$106.90 a tonne, as concerns over US tariffs and trade tensions affecting Chinese steel exports weighed on sentiment. The steel-making commodity declined 0.2% for the week.
What about small caps?
It’s been a quiet day so far with the WA public holiday in play, however, you can read about the following and more throughout the day.
- Sprintex Ltd has achieved CE Mark certification for its new range of G25 G820, G37 G835 and G55 G850 Industrial Jet Blowers, meeting the European CE Machinery Directive 2006/42/EC standard. The certification paves the way for the launch of this product line, with production set to begin in mid-March 2025 and initial deliveries expected soon after. This milestone enables immediate sales into the European Union (EU) and other jurisdictions that recognise the certification.
- Moab Minerals Ltd has secured a firm commitment from European Lithium Ltd for a A$500,000 placement, issuing 166,666,667 ordinary shares at A$0.003 per share. As part of the placement, EUR will also receive free-attaching options, exercisable at A$0.008 and expiring on December 5, 2027, at a ratio of one option for every two shares subscribed.
- Lumos Diagnostics Holdings Ltd, a provider of rapid point-of-care diagnostic technologies, has expanded the scope of its Development Agreement with Hologic Inc. The agreement covers the continued development of a new fetal fibronectin (fFN) test for Hologic, a leader in women’s health solutions.