Australian shares began the day ending a six-day winning streak, with ASX 200 futures down 36 points or 0.43% at 8:30 am AEST, following Wall Street’s weak lead. A gold selloff continued, with prices now below US$3,200 for the first time since April 11.
The major US indices were mixed, with muted market reaction to Wednesday’s announcement of US-Qatar investment deals, and US Treasury yields moved higher as rate cute expectations tempered. Commodities took a hit, with weakening demand and industry slowdowns prompting Moody’s to downgrade its metals forecast.
ASX outlook cloudy
Investors are opening the session with caution as commodities soften, while macroeconomic uncertainties continue to cloud the outlook. However, opportunities remain – particularly among small-cap miners and innovators positioning themselves around long-term structural trends like electrification, healthcare and AI-enabled tech.
One sure point of interest will be the April jobs report, due at 11:30 am. Economists expect the unemployment rate to remain steady at 4.1%, with any deviation from that likely to shift market expectations around the Reserve Bank of Australia’s policy.
Markets are pricing in a cautious central bank, with Westpac and National Australia Bank both expecting the RBA to keep rates on hold near-term despite broader global easing trends.
Small and mid-cap names will be active this morning, particularly in the mining and medtech sectors. Compumedics surged after revealing its MEG brain-scanning device successfully performed dual-patient readings in China, while Core Lithium rose as sentiment picked up in the lithium space.
In other small-cap action today:
- Tamboran Resources Corporation released third-quarter results highlighting its completion of a 35-stage stimulation campaign of the Shenandoah South 2H sidetrack well in the Beetaloo Basin, with plans to drill additional wells.
- FireFly Metals Ltd announced its maiden drilling program at the Rambler Main Mine within Green Bay has returned high-grade copper-zinc intersections beyond the extent of historical activities at the mine.
- Riversgold Ltd announced approval of a further 200 drill holes at Kalgoorlie East’s Northern Zone, saying it is moving the project towards a maiden mineral resources estimate.
- Lanthanein Resources Ltd has intersected primary gold mineralisation at its Lady Grey Project in Western Australia’s Yilgarn Region.
Wall Street’s shaky lead
Overnight, US markets offered little direction despite strength in tech stocks. The S&P 500 edged 0.1% higher, while the Dow Jones Industrial Average slipped 0.21%. The Nasdaq was the outperformer, gaining 0.72% – its sixth straight gain – as large-cap tech names continued to attract capital.
However, bond markets told a different story. US Treasury yields climbed, with the 10-year yield rising 4 points to 4.54% as traders recalibrated their expectations for Federal Reserve rate cuts. The US 2-year yield also increased 4 points, to 4.06% - the highest level since March.
A hotter-than-expected April Price Producer Index (PPI) in the US also raised concerns that inflationary pressures may prove stickier than hoped.
Commodities and currency
This backdrop has dragged on commodity markets, particularly gold, which fell 2.45% overnight to US$3,177 an ounce, dropping below the US$3,200 mark and down 7.5% over the last six sessions. Iron ore is down 2% to US$101.70 per tonne.
Other price moves in commodities included:
- Aluminium futures: Up 2.4% to $2,457.25 per tonne
- Copper futures: Down 1.5%
- Spot gold: Near US$3,179 at the US close
- Oil (Brent): Down 0.8% to US$66.09
Currencies were mixed against the US dollar, with the Australian dollar dipping 0.57% to US64.32 cents. The euro fell from US$1.1264 to near US$1.1170 at the US close, while the Japanese yen firmed from 147.22 yen per US dollar to 146.75 per dollar.
Looking ahead
In addition to the employment data scheduled for today, investors will be watching for trading updates from GrainCorp and Xero. Ampol, Atlas Arteria and Resolute Mining hose annual general meetings.
In the US, data are due on retail sales, jobless claims, industrial production and manufacturing. Alibaba, Applied Minerals and Deere issue earnings.