ASX 200 futures are down 28 points (-0.34%) as at 8:30 am AEST after the S&P 500 closed higher for a seventh consecutive session, staging a late-session rally to secure one of its longest winning streaks in recent years.
The S&P/ASX 200 Index rose 55 points or 0.69% to close at 8126 on Tuesday, logging a fifth straight gain and ending April 3.61% higher. Information Technology, Real Estate, and Consumer Discretionary sectors led the advance, while Utilities, Energy, and Materials underperformed.
The rally came despite a stronger-than-expected March quarter Consumer Price Index (CPI), which showed headline inflation at 0.9% quarter-on-quarter (vs 0.7% expected) and the annual rate holding at 2.4%. The Reserve Bank of Australia’s preferred measure, the Trimmed Mean, rose 0.7% in the quarter, bringing annual inflation down to 2.9% – the first time within the 2–3% target band since late 2021.
Despite the CPI surprise, market pricing indicates a 95% chance of a 25 basis point rate cut in May, with 117 basis points of cuts expected by year-end.
However, soft manufacturing data from China, with the National Bureau of Statistics (NBS) PMI falling to 49 in April from 50.5, cast a shadow over the day’s gains. Iron ore prices slipped 1.33% to US$97.15 per tonne, and copper futures dropped 5.41%. BHP’s American Depositary Receipts (ADRs) fell 2.16% in offshore trading, pointing to a challenging session ahead for Australian miners.
Small cap news is trickling through, but is mainly dominated by quarterlies. The S&P/ASX Small Ordinaries lost 0.026% yesterday to finish at 3,053.50. The index is up 2.58% over the past five days.
Investors look past GDP contraction
Investors shrugged off recessionary concerns after preliminary data showed the United States economy contracted by 0.3% in the March quarter – its first decline in three years – largely due to a surge in imports ahead of anticipated tariff hikes. The early sell-off in equities was reversed after March’s Personal Consumption Expenditures (PCE) price index rose by 0.7%, surpassing expectations of 0.5%, suggesting consumer demand remained resilient despite macro headwinds.
While some analysts suspect this strength in spending may reflect forward-buying in anticipation of price increases, markets opted for an optimistic interpretation. Additional support came from the ADP employment report, which showed 62,000 new private sector jobs added in April, though this was sharply lower than the 147,000 recorded in March.
In equity markets, Super Micro Computer fell 11.5% and Snap declined 12.4% after underwhelming earnings. However, after-hours sentiment improved as Microsoft posted earnings per share (EPS) of US$3.46 versus forecasts of US$3.22, and revenue of US$70.07 billion. Its Azure cloud division rose 33%, with artificial intelligence accounting for nearly half that growth. Meta also beat expectations, with EPS of US$6.43 and revenue of US$42.31 billion, sending its shares up 4.8%.
Attention now turns to tonight’s US jobless claims and Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI), expected to decline to 48 in April. Markets are also eyeing earnings from Amazon and Apple, with the US interest rate futures market currently pricing in 100 basis points of Federal Reserve rate cuts by year-end.
Healthcare stocks lift European markets
European sharemarkets advanced on Wednesday, buoyed by a 1.2% gain in healthcare stocks. However, the rise was tempered by a 7.4% slide in Glencore shares after the commodities group reported a 30% year-on-year decline in copper production for the March quarter.
- The pan-European FTSEurofirst 300 index added 0.5% on the day but still recorded a second straight monthly decline, down 1.5% in April.
- In the United Kingdom, the FTSE 100 index rose 0.4%, yet it too closed out its second consecutive monthly loss, falling 1.0% across April.
Currencies, commodities and metals
In currency markets, major units weakened against the US dollar.
- The Euro declined from US$1.1398 to US$1.1319, stabilising near US$1.1325 at the US close.
- The Australian dollar slipped from US64.16 cents to US63.55 cents, before recovering slightly to near US64.00 cents.
- The Japanese yen eased from 142.44 to 143.18 per US dollar and was trading around 143.05 at the US close.
Commodities
Oil prices fell sharply as Saudi Arabia indicated plans to increase production in a bid to regain market share.
Brent crude declined US$1.13 or 1.8% to US$63.12 per barrel, while US Nymex crude plunged US$2.21 or 3.7% to US$58.21 per barrel.
Over April, Brent and Nymex recorded losses of 15% and 18% respectively—their largest monthly declines since November 2021.
- Base metals also retreated, with copper futures falling 5.5% and aluminium futures down 2.6% on the back of soft Chinese factory data and persistent trade concerns.
- Gold futures dipped US$14.50 or 0.4% to US$3,319.10 an ounce, though spot gold clawed back to near US$3,289 as rate cut expectations firmed after weaker-than-expected US economic growth.
- Iron ore prices eased, down US10 cents or 0.1% to US$99.76 per tonne, amid concerns over potential steel output cuts in China.