The ASX Is set to start the week in the red after Wall St closed flat. ASX 200 futures are down 0.5% to 7945 points. However, the S&P/ASX 200 Index closed 145 points or 1.82% higher last week at 7,931, buoyed by the absence of fresh tariff developments and stronger expectations of a Reserve Bank of Australia (RBA) rate cut in May, following February’s labour force report.
With six trading sessions remaining in March, the benchmark index must rally nearly 3% from Friday’s close to avoid back-to-back monthly and quarterly losses.
Sector performance was led by Consumer Staples (+3.90%), Energy (+3.25%), Industrials (+2.40%), and Utilities (+2.23%). In contrast, Information Technology (+0.76%), Materials (+1.04%), Consumer Discretionary (+1.19%) and Telecommunications (+1.31%) lagged the broader market.
Among individual stocks, Bannerman Energy surged 23.56%, followed by Nanosonics (+17.56%), Seven West Media (+13.79%) and Deep Yellow (+12.38%). Decliners included Appen (-10.40%), BetMakers (-7.62%), James Hardie (-6.70%) and A2 Milk (-6.01%).
“In January (last month), the Monthly CPI indicator rose by 2.5% YoY, unchanged from the prior month but below expectations of 2.6%. Annual trimmed mean inflation rose 2.8% in January up slightly from 2.7% in December. The expectation for February is for headline inflation to fall to 2.4% YoY from 2.5% prior, while the trimmed mean is expected to ease to 2.7%YoY from 2.8%,” IG Markets analyst Tony Sycamore said.
“The Australian interest rate market starts this week pricing in 18bp of RBA rate cuts for May, with a cumulative 65bp of RBA rate cuts priced for 2025, up from 59bp this time last week.”
In the United States, equity markets ended the week higher, extending their streak to a fourth straight Friday of gains. Investor sentiment improved after President Donald Trump hinted at potential tariff “flexibility”. The Dow Jones Industrial Average rose 497 points (+1.20%), while the S&P 500 and Nasdaq 100 added 0.51% and 0.25%, respectively.
With few data releases and minimal impact from Friday’s triple witching, focus shifted to remarks by Chicago Federal Reserve President Austan Goolsbee. He advocated a patient, long-term policy approach, noting: “If there is progress on inflation, rates will be lower in 12 to 18 months.”
In corporate news, Tesla climbed 5.27% to US$248.71, recovering earlier losses. Nike dropped 5.46% to US$67.94 after flagging weaker consumer demand and tariff impacts. FedEx fell 6.45% to US$230.33 on disappointing earnings and lowered guidance.
“The key highlights on the data calendar this week are the S&P500 flash PMIs, CB Consumer Confidence, and the Fed's preferred inflation measure, the Core PCE Price Index. Expectations are for the headline PCE Price Index to rise to 2.7% YoY from 2.5% prior and the Core measure to increase to 2.8% YoY from 2.6% YoY. The US rates market starts the week pricing in 22bp of Fed rate cuts for June and a cumulative 67bp of Fed rate cuts this year,” Sycamore noted.
“Towards the end of the week, month-end and quarter-end flows in stocks and FX will also be important factors to consider. In the FX space and based on Friday's closing prices, watch for buying of the US dollar at the expense of this months strongest currencies, the EUR and GBP. Meanwhile, I would expect to see month end buying of this months losers, the S&P500 and the Nasdaq at the expense of this months winners - European and Chinese stock markets.”
European markets dip as travel and resource stocks weigh
European equity markets declined on Friday, with travel-related stocks leading losses after a fire at a nearby electrical substation forced the temporary closure of London’s Heathrow Airport. The travel sector shed 1.6%, with International Consolidated Airlines Group down 1.9%, Lufthansa falling 1.7%, and Ryanair slipping 2.3%.
Basic resources were the weakest performers, losing 2.6% as metal prices retreated.
- The continent-wide FTSEurofirst 300 Index fell 0.6% on the day but managed a 0.6% gain for the week.
- The United Kingdom’s FTSE 100 Index also dropped 0.6% on Friday but closed the week 0.2% higher.
Currencies and commodities
Currencies
Currency movements were mixed. The Euro declined from US$1.0858 to US$1.0802, trading near US$1.0815 at the US close.
- The Australian dollar eased from US62.99 cents to US62.58 cents, settling near US62.70 cents.
- The Japanese yen strengthened from 149.63 per US dollar to JPY148.63, before ending near JPY149.30.
Commodities - Brent records second weekly gain
Global crude oil prices rose on Friday, notching a second straight weekly gain amid fresh United States sanctions on Iran and updated output guidance from the Organisation of the Petroleum Exporting Countries and allies (OPEC+), which boosted expectations of tighter supply.
- Brent crude rose US16 cents or 0.2% to US$72.16 per barrel.
- West Texas Intermediate (WTI) lifted US21 cents or 0.3% to US$68.28.
- For the week, Brent gained 2.1% and WTI rose 1.6%, marking their strongest weekly performance since early January.
Base metals were mixed.
- Copper ended flat, while aluminium fell 1.7%, pressured by a firmer US dollar. For the week, copper gained 4.5% and aluminium declined 2.7%.
- Gold futures fell US$22.40 or 0.7% to US$3,021.40 per ounce on Friday, weighed by profit-taking and a stronger US dollar. Spot gold hovered near US$3,023 at the US close, gaining 0.7% for the week after reaching a record high of US$3,057.21 per ounce on Thursday.
- Iron ore futures slipped US15 cents or 0.1% to US$102.00 per tonne, reflecting concerns over Chinese demand amid intensifying global trade tensions. The steelmaking commodity fell 0.8% over the week.
What about small caps?
S&P/ASX Small Ordinaries were up 0.085% on Friday to 3,076.40 and gained 2.39% over the week.
There has been some good news for several small cap companies this morning and you can read about the following and more throughout the day:
- Terra Metals Ltd has reported promising results from Phase 1 metallurgical testwork at its Dante Project in Western Australia. The testwork, using representative samples from the Dante Reefs, indicated the potential to produce three high-grade concentrates through simple, low-cost processing methods. The company views the Dante Reefs as a potentially globally significant source of commercially attractive mineral products.
- Astral Resources NL has released assay results from a recent diamond drilling program at the Kamperman Deposit, part of its 100%-owned Feysville Gold Project, located approximately 14 kilometres south of Kalgoorlie. The program comprised three diamond holes totalling 369.9 metres.
- Dynamic Metals Ltd has completed the first phase of reverse circulation (RC) drilling at the Cognac West prospect, part of its Widgiemooltha Project in Western Australia. The company has identified multiple gold targets as a result of this phase.
- Livium Ltd announced that its wholly owned subsidiary, Envirostream Australia Pty Ltd, has signed an exclusive battery recycling agreement with Hilti (Aust.) Pty Ltd. Envirostream is a recognised leader in Australia's battery recycling sector, and the agreement marks a significant step in expanding the company’s recycling capabilities.