Australian shares were set to open higher Friday, with ASX 200 futures up 80 points or 0.96% at 8:30 am AEST. Investors are taking cues from Wall Street, where cooling inflation data and a dip in bond yields have bolstered expectations of multiple US rate cuts this year.
US sharemarkets were mixed but mostly higher overnight, closing near best levels as The S&P 500 recovered early losses to add 0.4%, while the Nasdaq ended a six-day win streak but still up more than 6% this week. The FTSE100 index outperformed, rising 0.6% on strong GDP data from the UK.
US economy shows signs of cooling
Markets were buoyed by the latest US Price Producer Index (PPI) data, which fell 0.5% in April, its steepest monthly drop in five years and well below expectations of a 0.2% rise. The core PPI also declined 0.4%, suggesting companies may be absorbing cost pressures from tariffs.
Retail growth also underwhelmed, while factory output declined for the first time in six months and housing market confidence slumped to a new low.
These signs of a cooling US economy fuelled optimism that the Federal Reserve may need to cut rates sooner and more aggressively to avoid a recession. Traders are now pricing in at least two cuts before year-end.
The weaker US economic data also supported a rally in US bond yields. The 10-year Treasury yield fell 9 basis points to 4.44%; the 2-year yield also dropped 9 basis points, to 3.97%.
ASX recap, small caps action
In local markets, the ASX 200 gained 0.22% yesterday to close at 8,297, riding solid gains by Commonwealth Bank of Australia, Wesfarmers and Xero. Financials performed well, up 1.1%, as did consumer discretionary, up 1%.
Today, Appen reports revenue for the 2025 fiscal year of $235 million to $260 million, compared with $248 million consensus. Fletcher Building has announced the de-establishment of its standalone Australian division.
Rio Tinto announced a $1.2 billion investment to modernise a century-old hydroelectric power plant in Quebec, its largest single hydro investment since the 1950s.
In small caps announcements today:
- Highfield Resources Ltd has made strategic leadership changes within its Spanish subsidiary, Geoalcali S.L., as the company advances the construction and development of its flagship Muga potash project. Carles Aleman will take over as CEO, and Oliver Vadillo assumes the newly created role of head of corporate strategy and business development.
- Altech Batteries Ltd has confirmed the longevity of its CERENERGY® sodium-nickel-chloride battery technology, following a successful activation of a Zebra battery that had been in storage for 28 years.
Oil slides, gold shines
Oil prices declined for a second straight session on reports of a possible US-Iran nuclear deal. Observers noted that a deal to lift US sanctions could release 200,000-300,000 barrels a day onto a market already awash in OPEC+ supply.
The Brent crude price fell 2.4% to US$64.53, while WTI dropped to US$61.62.
Meanwhile, gold rose 1.7% to US$3,240 an ounce, lifted by safe-haven demand, a softer US dollar and geopolitical tensions. However, the Australian dollar slipped, down 0.3% to US$0.6405, despite Thursday’s strong jobs data.
- Gold futures: up 1.2% to US$3,226.60
- Iron ore futures: down 0.3% to US$100.42
- Copper futures: up 0.7%
- Aluminium futures: down 2.2% to US$2,403.50 a tonne
Today’s watchlist
In other ASX news today, Appen and Gold Road Resources are set to host annual general meetings, and Dicker Data trades ex-dividend.
Later today, US data on housing starts, building permits, international trade prices and consumer sentiment will be released, providing more clues on the strength of the US economy and the Fed’s next move.