ASX 200 futures rose 73 points or 0.87% as at 8:30 am AEST, pointing to a strong start for local equities ahead of the Reserve Bank of Australia’s (RBA) rates decision.
The RBA is widely anticipated to lower the cash rate by 25 basis points to 3.85% when it announces its policy decision at 2:30 pm. Markets will be watching closely for any forward guidance accompanying the move. With Q1 2025 inflation returning to the 2–3% target range for the first time since late 2021 and softening global growth prospects, a 25 basis point cut to 3.85% is widely anticipated. Markets are fully pricing in the move, with 74 basis points of easing expected by year-end. The surprise would be if the RBA held rates steady or adopted a more hawkish tone during the subsequent press conference.
A positive start today, would reverse some of yesterday’s losses.
The ASX200 dropped 48 points (-0.58%) to close at 8,295, snapping an eight-session winning streak. Weak sentiment followed Moody’s downgrade and fresh data from China showing new home prices declined for a 22nd straight month. Losses in the Energy (-1.82%), Materials (-1.55%) and Real Estate (-0.67%) sectors weighed, though Utilities (+0.31%), Telcos (+0.22%) and Consumer Discretionary (-0.12%) outperformed.
Major miners led declines: Fortescue fell 4.88% to A$16.17, BHP dropped 2.44% to A$38.75, and Rio Tinto eased 1.31% to A$119.46. Among the banks, Macquarie slipped 3.44% to A$203.98 after trading ex-dividend. ANZ, Westpac and NAB also fell, while Commonwealth Bank rose 1% to A$171.36. Gold producers rallied on safe haven buying, with bullion up 1.2% in Asia to A$3,243. Regis Resources advanced 3.37%, Evolution Mining gained 3.18%, and Newmont lifted 2.54%.
US overcomes early losses
Overnight, US markets overcame early losses tied to renewed credit downgrade concerns, with major indices closing mostly higher. Investor sentiment improved as the session progressed, helped by stabilising yields and resilience in key sectors.
Comments from United States Federal Reserve officials tempered expectations for imminent interest rate cuts. Policymakers indicated that more time is needed to fully assess the economic outlook, suggesting a cautious approach to policy easing.
Health care stocks led gains on the S&P 500, climbing 1.0%, driven by an 8.2% surge in UnitedHealth shares after new chief executive officer Stephen Hemsley and chief financial officer John Rex purchased approximately US$30 million in company stock. Novavax rose 15.0% after securing long-anticipated regulatory approval for its Covid-19 vaccine.
Conversely, retail investor favourites Tesla and Palantir Technologies dropped more than 2.0%. The Dow Jones Industrial Average advanced 137 points or 0.3%, the S&P 500 added 0.1% to mark a sixth consecutive session of gains, and the Nasdaq Composite rose modestly by 4 points or 0.02%.
Onwards and upwards in Europe
In Europe, equities continued their upward trend, buoyed by resilient corporate earnings despite broader global concerns. Travel and leisure stocks led the gains, rising 0.9%. Ryanair climbed 4.8% on strong travel demand projections and fare recovery expectations, while BNP Paribas gained 3.4% following the announcement of a share buyback program.
- The pan-European FTSEurofirst 300 index rose 0.1%.
- The UK FTSE 100 lifted 0.2%.
Currencies and commodities
Currency markets were mixed.
- The Euro strengthened to US$1.1245.t
- The Australian dollar firmed to US64.55 cents.
- The Japanese yen softened to 144.85 per US dollar.
Commodities
Oil prices edged higher as geopolitical tensions over Iran offset concerns from the US rating downgrade.
- Brent crude rose 13 cents to US$65.54 per barrel.
- US Nymex crude added 20 cents to US$62.69.
Among commodities, copper gained 1.7% on a weaker US dollar. Aluminium slipped 1.4% due to rising inventories and Chinese output.
Gold rallied 1.5% to US$3,233.50 per ounce, buoyed by safe-haven demand. Iron ore eased 0.1% to US$100 per tonne, amid soft Chinese economic data and subdued demand forecasts.