The Australian share market is poised for a modest rise at the open, with ASX 200 futures up 8 points (+0.09%) at 8:30 am AEST.
The S&P/ASX 200 Index rose 73 points (+0.88%) last week to close at 8,434, marking a 3.8% gain for May. Market strength was underpinned by the Reserve Bank of Australia's dovish pivot and easing global trade tensions. Key movers included Helios Energy (+16.67%) and EML Payments (+16.49%), while Novonix (-13.40%) and Imugene (-11.76%) led the laggards.
Sector-wise, Information Technology (+3.85%) and Energy (+2.61%) outperformed, while Utilities (-0.68%) and Materials (-0.21%) underperformed.
As for small caps, the S&P/ASX Small Ordinaries (XSO) gained 0.45% to finish at 3,229.00 on Friday. Over the week, it was 1.28% higher. It could be a quiet day for news today as Western Australia takes a breather for Western Australia Day.
The economic focus this week is Australia’s Q1 2025 gross domestic product (GDP) data due Wednesday. Preliminary forecasts suggest a 0.4% quarter-on-quarter increase, supported by government and dwelling investment, lifting annual growth to 1.5%. This would remain consistent with the RBA’s full-year forecasts of 1.8% by June and 2.1% by December. The futures market is currently pricing in a 70% probability of a July rate cut and 73 basis points of easing by year-end.
Internationally, trade tensions remain in focus. Tariff negotiations between the United States and China appear to be stalling, though last week’s US court ruling could see the average tariff rate drop from 13.5% to below 6%—if enforced.
Nasdaq posts best monthly gain since late 2023
US markets ended May on a strong note despite a flat session on Friday, with the Nasdaq climbing 9.04% for the month—its best performance since November 2023. The S&P 500 added 6.15% and the Dow Jones Industrial Average gained 3.94%, or 1,600 points. The rally followed dovish signals from the Federal Reserve and resilient economic data, including a cooler-than-expected Core PCE inflation print.
Investors are also watching upcoming US data including ISM PMIs, JOLTS job openings, and Friday’s non-farm payrolls report. Markets expect 130,000 jobs to be added in May, with the unemployment rate steady at 4.2%. The US rates market currently implies an 85% chance of a September rate cut and a cumulative 50 basis points of cuts by year-end.
European markets edge higher despite tariff concerns; commodities mixed
European sharemarkets ended higher on Friday, buoyed by strength in utilities and healthcare sectors, both up 0.8%, even as trade uncertainty lingered. The FTSEurofirst 300 index gained 0.2% for the session and advanced 3.9% in May.
Inflation data from Germany offered additional support, with annual consumer prices easing to 2.1% in May, from 2.2% in April, edging closer to the European Central Bank’s 2% target and reinforcing expectations for a potential interest rate cut.
In London, the FTSE 100 index rose 0.6% to close the month 3.3% higher.
Currencies mixed in global trade
Currency movements were varied against the US dollar.
- The Euro climbed from US$1.1314 to US$1.1366, settling near US$1.1345 at the US close. The Australian dollar rose from US64.07 cents to US64.46 cents, before ending near US64.30 cents.
- The Japanese yen weakened, falling from JPY143.51 to JPY144.37 per US dollar, trading around JPY144.05 late in the session.
Oil weak ahead of OPEC+ meeting
Crude oil prices fell ahead of the OPEC+ decision on potential July output increases.
- Brent crude dipped US25 cents or 0.4% to US$63.90 a barrel.
- US Nymex crude eased US15 cents or 0.2% to US$60.79.
- Both benchmarks lost more than 1% over the week.
Metals and gold ease
Base metal movements were subdued.
- Copper ended flat but declined 3.2% for the week.
- Aluminium rose 0.2% on Friday but posted a 0.4% weekly drop.
- Gold futures fell US$28.50 or 0.9% to US$3,315.40 an ounce as markets assessed tariff news and a firmer US dollar.
- Spot gold traded near US$3,289. Bullion declined 1.5% over the week.
Iron ore under pressure
Iron ore futures slipped US15 cents or 0.2% to US$99.12 a tonne. The commodity marked a second weekly decline, down 0.7%, amid steel rebar price weakness in China and growing concerns over global steel demand.