The S&P/ASX 200 Index is trading 0.4% higher at 8,600 points as of 11:15am AEST, supported by strength in the banking sector. Mining stocks are the only sector in negative territory.
The S&P/ASX 200 Index closed 9 points or 0.11% lower on Monday at 8,570.40, after trading in a narrow range throughout the session. Losses in the Industrials (-0.57%), Consumer Discretionary (-0.48%) and Utilities (-0.46%) sectors were offset in part by gains in Energy (+0.54%), Materials (+0.53%) and Telecommunications (+0.30%). Given a 0.5% decline in US equity futures following renewed tariff concerns, the local market’s modest pullback was comparatively resilient.
Among individual stocks, DroneShield surged 16.97% to A$3.24 after announcing a manufacturing expansion to meet contract demand. Hansen Technologies rallied 10.88% to A$5.30 after beating earnings expectations and lifting full-year guidance. Uranium stocks also performed strongly, led by Silex Systems (+4.25%) and Deep Yellow (+4.02%).
Investors are now focused on Thursday’s Labour Force Report for June. Following a 2,500 job decline in May, economists expect a 20,000 job gain with unemployment holding steady at 4.1%. The market is pricing in a 21 basis point (bp) interest rate cut from the Reserve Bank of Australia (RBA) in August, with 58bp priced in by year-end.
US markets rally as investors eye inflation and earnings
Wall Street closed higher overnight, as markets largely brushed aside renewed tariff threats, including a proposed 100% secondary tariff on buyers of Russian oil. Investor attention shifted to upcoming second-quarter earnings reports and inflation data. Major banks including JPMorgan, BlackRock, Citibank, Wells Fargo and Bank of New York Mellon are due to report before the market opens.
Consensus forecasts S&P 500 earnings per share growth of 4.8% to 5.2% year-on-year for Q2. Meanwhile, the June Consumer Price Index (CPI) report is expected to show monthly headline and core inflation rising 0.3%, with annual rates lifting to 2.7% and 3.0% respectively. Market reaction is likely to be muted unless core inflation exceeds 3.2%. The US interest rate market is pricing in 17bp of Federal Reserve cuts for September and 50bp by year-end.
Europe weakens on tariff escalation; UK bucks trend
European equities came under pressure as investors responded to news that the United States will impose a 30% tariff on European Union goods from 1 August. Fears of an economic slowdown and expectations of retaliatory tariffs weighed on sentiment. Auto manufacturers led declines with Volkswagen down 1.9%, and BMW and Mercedes each falling 2.5%.
- The broader FTSEurofirst 300 closed slightly lower.
- London’s FTSE 100 rose 0.6%.
Currencies soften
- The Euro weakened from US$1.1714 to US$1.1651, closing near US$1.1665.
- The Australian dollar eased from US65.75 cents to US65.43 cents and was near US65.47 cents at the US close.
- The Japanese yen depreciated to JPY147.71 per US dollar.
Commodities mixed
Oil prices declined on Monday as earlier gains faded following underwhelming US sanctions announcements.
- Brent crude fell US$1.15 or 1.6% to US$69.21 per barrel.
- US Nymex dropped US$1.47 or 2.1% to US$66.98.
Base metals were broadly weaker, with copper and aluminium each down 0.8% due to the stronger US dollar and growth concerns.
- Gold eased 0.1% to US$3,359.10 per ounce as early safe-haven demand faded.
- Iron ore futures rose US$0.05 to US$96.76 per tonne, aided by upbeat Chinese trade data.