The ASX is set to rise today.
ASX200 futures rose 5 points (+0.05%) to start the week, following a modest 8-point gain (+0.10%) last week that left the index at 8,514. Despite subdued local performance relative to international markets, the index remains on track for an 8.55% quarterly gain and a 9.6% return for the financial year.
Investor expectations of an interest rate cut at the Reserve Bank of Australia's (RBA) July 8, meeting remain firm, supported by last week's soft inflation data. Wednesday’s May retail sales figures — forecast to rise 0.3% month-on-month — are the final key input ahead of the decision. The Australian interest rate market is currently pricing in a 92% chance of a rate cut, with 83 basis points of easing priced in by year-end.
For the week, Financials (+1.82%) and Materials (+1.78%) led sector gains, while Energy (-4.46%) and Utilities (-2.84%) lagged. Top stock performers included Collins Foods (+29.92%) and DroneShield (+24.61%), while Adairs (-18.22%) and Reece (-12.84%) declined sharply.
Wall Street rallies on trade optimism and rate cut hopes
US equity markets surged to fresh record highs last week, buoyed by progress on trade deals and rising confidence in upcoming Federal Reserve interest rate cuts. The S&P 500 climbed 3.44%, the Nasdaq 100 added 4.20%, and the Dow Jones Industrial Average gained 1,612 points (+3.82%).
Markets responded positively to news that the United States and China had finalised a trade framework from May’s Geneva talks, with China committing to rare earth exports and the US agreeing to withdraw countermeasures. Additional trade deals are expected in coming days, although tensions flared as President Trump abruptly ended negotiations with Canada over a digital services tax.
Personal income and spending both declined in May, while core PCE inflation came in slightly hotter than forecast. The US interest rate market now prices in a 5 basis point cut for July and 63 basis points of easing by year-end.
Europe lifts on trade optimism, auto sector leads
European sharemarkets ended higher on Friday as improved trade sentiment supported risk appetite. The pan-European FTSEurofirst 300 rose 1.2%, with the automobiles and parts index up 4.1%. The UK FTSE 100 gained 0.7% on the day and 0.3% for the week.
Investors await updates from the European Central Bank’s annual Sintra forum this week, where global policymakers are expected to outline economic assessments and policy outlooks amid lingering trade and inflation uncertainty.
Currencies mixed, commodities rebound
The Australian dollar dipped from US65.59 cents to US65.09 cents, before settling around US65.30 cents at the US close. The Euro rose to US$1.1720, while the Japanese yen weakened to JPY144.65 per US dollar.
Oil prices recovered marginally on Friday despite weekly losses. Brent crude rose US4 cents to US$67.77 per barrel, while WTI added US28 cents to US$65.52. Both benchmarks fell around 12% for the week — the largest decline since March 2023 — following easing geopolitical tensions.
Base metals were mixed. Copper was flat on Friday but gained 5% over the week, supported by supply constraints. Aluminium eased 0.2%, while gold futures declined 1.8% to US$3,287.60 per ounce as risk appetite improved. Iron ore inched up to US$94.49 per tonne but ended the week down 0.3%.