The ASX could waver today after a slide on Wall St overnight. ASX 200 futures were down 0.2% to 7959 points after the US session ended.
The ASX200 closed 90 points (1.16%) higher at 7,918 yesterday, buoyed by strength in the Information Technology(+2.42%), Real Estate (+2.13%), and Financials (+1.86%) sectors. Materials (-0.63%) and Utilities (-0.19%) were the only sectors to end in negative territory.
The index surged on the back of Wall Street’s gains after the Federal Open Market Committee (FOMC) left interest rates unchanged and reaffirmed its forecast for two rate cuts this year. Australian labour force data for Februaryfurther bolstered market sentiment, reinforcing expectations—including our own—that the Reserve Bank of Australia (RBA) may cut rates in May following the release of fourth-quarter inflation data.
“While employment fell by 52,800 in February, contrary to expectations for a 30,000 rise, the unemployment rate remained unchanged at 4.1% due to a decline in the participation rate to 66.8% from 67.2%. The ABS noted that the fall in the participation rate was due to “fewer older workers returning to work in February,” IG markets analyst Tony Sycamore said.
“The interest rate-sensitive Financial Sector finally found some friends. Macquarie surged 3.81% to $201.79, CBA added 2.21% to $145.93, Westpac climbed 1.63% to $30.61, ANZ rose 1.53% to $29.16 and NAB finished 1.35% higher at $33.09.
“Australian interest rate market is pricing in 18bp of RBA rate cuts for May, with a cumulative 65bp of RBA rate cuts priced for 2025, up from 59bp yesterday morning.”
As for small caps. The S&P/ASX Small Ordinaries gained 1.57% yesterday to finish at 3,073.80. Over the past five days, the index has gained 3.68%.
US stocks retreat
Overnight, US stocks retreated, relinquishing early gains as investors reassessed economic risks and the Federal Reserve’s response to inflation and slowing growth. Initial jobless claims rose by 2,000 to 223,000 last week, slightly below expectations of 224,000, while continuing claims increased by 33,000 in early March, aligning with forecasts. Despite recent weaker economic data, the figures suggest the US labour market remains resilient. Meanwhile, the Philadelphia Fed Manufacturing Index declined to 12.5 in March from 18.1 in February, but still surpassed the expected 8.5.
In equities, chipmaker Broadcom fell 2.50% to $39.10, while Nvidia edged 0.86% higher to $118.53. Tesla notched a 0.17% gain to $236.26, marking a second consecutive day of increases, despite announcing a recall of over 46,000 Cybertrucks due to concerns over an exterior panel detaching.
“The data calendar is light tonight, before activity pickups up next week with the release of the S&P 500 flash PMIs, CB Consumer Confidence, and the Fed's preferred inflation measure, the Core PCE Price Index. Towards the end of the week, month-end and quarter-end flows in stocks and FX will also come into play,” Sycamore noted.
European markets retreat as banks and autos drag
European sharemarkets declined on Thursday, snapping a four-session winning streak. Banking stocks fell 1.7%, while automobile and parts shares dropped 2.2% as investors reacted to policy decisions from major central banks.
The Bank of England and Sweden’s Riksbank maintained interest rates at 4.5% and 2.25%, respectively, while the Swiss National Bank cut its policy rate by 25 basis points to 0.25%.
- The FTSEurofirst 300 index slipped 0.4%.
- The UK FTSE 100 index edged 0.1% lower in London.
Currencies and commodities
Currencies
In currency markets, major pairs weakened against the US dollar in European and US trade.
- The euro declined from US$1.0901 to US$1.0815, recovering slightly to US$1.0855 at the US close.
- The Australian dollar dipped from US63.43 cents to US62.72 cents, settling near US63.00 cents.
- The Japanese yen weakened from JPY148.18 per US dollar to JPY148.94, trading near JPY148.80 at the US close.
Commodities
Oil prices advanced as fresh US sanctions on Iran and escalating Middle East tensions countered the impact of a strong US dollar.
- Brent crude rose US$1.22 (1.7%) to US$72.00 per barrel.
- US Nymex crude gained US$1.10 (1.6%) to US$68.26 per barrel.
Base metals posted mixed results.
- Copper futures rose 0.2%, reaching a 10-month high, while aluminium fell 0.2% under pressure from the stronger US dollar.
- Gold futures gained US$2.60 (0.1%) to US$3,043.80 per ounce, buoyed by expectations of potential US Federal Reserve rate cuts. Spot gold traded near US$3,045 at the US close after reaching a record high of US$3,057.21.
- Iron ore futures edged up US4 cents (less than 0.1%) to US$102.15 per tonne, constrained by ongoing concerns over China’s steel demand amid escalating global trade tensions.