The S&P/ASX 200 futures were down 60 points or 0.69% at 8:30 am AEST, signalling a weaker start to Tuesday’s session despite gains on Monday. The benchmark index rose 30.8 points or 0.4% to close at 8,697.7, snapping a two-day losing streak, while the All Ordinaries finished 0.3% higher. Investor sentiment was lifted after the United States reached a trade deal with the European Union and looked set to extend its tariff truce with China.
Eight of the 11 ASX sectors advanced, although materials stocks underperformed. Boss Energy plunged 44% to A$1.91 after warning of potential challenges at its Honeymoon uranium project. Iron ore miners declined with Rio Tinto down 1.6% to A$116.95, Fortescue Metals off 1.1%, and BHP losing 1.2% to A$40.33 as Singapore iron ore futures fell 1.8% to US$101.40 per tonne. Lithium producers also came under pressure, with Pilbara Minerals down 11.7% and Liontown Resources falling 8%, tracking a sharp decline in Chinese lithium carbonate futures.
The key event on this week’s economic calendar is the release of Australia’s second-quarter Consumer Price Index (CPI) report, due tomorrow.
In the March 2025 quarter, headline inflation rose 0.9% quarter-on-quarter (QoQ), keeping the annual rate at 2.4% — slightly above expectations of 2.3%. The Reserve Bank of Australia’s (RBA) preferred measure, the trimmed mean, increased 0.7% over the quarter, pushing the annual rate down to 2.9% from 3.3% — the ninth consecutive quarterly decline and the lowest level since December 2021.
At its July meeting, the RBA surprised markets by holding the cash rate steady at 3.85%, citing stronger-than-expected monthly inflation data but signalling it would await further confirmation that inflation is tracking sustainably back to target — with specific reference to this week’s CPI release.
For the June quarter, consensus expectations are for headline CPI to rise 0.8% QoQ, bringing the annual rate to 2.2%. The trimmed mean is forecast to again rise 0.7% QoQ, which would lower the annual rate to 2.6%.
A 2.6% print would align with RBA projections and, alongside soft June labour data, may open the door to a rate cut in August. However, a trimmed mean result of 2.8% or higher would likely see the central bank keep rates on hold, which could prompt a sell-off in the S&P/ASX 200 Index.
Also this week, Australia’s June-half profit reporting season begins, with results from Rio Tinto on 30 July and ResMed on 1 August. Investors will closely watch Rio’s results, with resource company earnings expected to weigh on the season. Broader market attention will focus on forward guidance, particularly regarding the potential impact of US tariffs.
US markets mixed as investors assess trade developments
US markets closed mixed on Monday. The S&P 500 added just 1 point or 0.02%, notching a sixth consecutive record close, while the Nasdaq rose 0.3% and the Dow Jones Industrial Average slipped 0.1% or 64 points. Markets responded cautiously to the US-EU tariff deal, which imposes a 15% levy on most European exports — including autos — and comes ahead of an August 1 tariff deadline on Chinese goods.
High-level talks between the US and China resumed in Stockholm, reportedly aiming to extend their existing tariff truce by three months. In corporate news, Super Micro Computer surged 10.2% amid reports that the US has paused new tech export restrictions to China. Nike rose 3.9% following an upgrade by JP Morgan, while Revvity dropped 8.3% on revised guidance.
European markets retreat as tariff deal disappoints auto sector
European sharemarkets declined, with the pan-European FTSEurofirst 300 index falling 0.2% and the UK’s FTSE 100 down 0.4%. The newly announced US-EU trade agreement dashed hopes for a zero-tariff regime, setting duties at 15% — well above the 2.5% average rate in 2023. European auto stocks dropped 1.8% as the sector absorbed the implications of reduced, but still significant, trade barriers.
Currency, commodities and energy markets
The Euro fell from US$1.1744 to US$1.1585, while the Australian dollar slipped from US65.63¢ to US65.12¢. The Japanese yen weakened to JPY148.55 per US dollar.
Brent crude rose 2.3% to US$70.04 per barrel and US Nymex added 2.4% to US$66.71 following the US-EU deal and renewed pressure on Russia.
Base metals mostly fell, with copper futures down 2.9% and aluminium off 0.5%.
Gold futures declined US$25.60 or 0.8% to US$3,310 per ounce on a stronger US dollar and improved risk appetite.
Iron ore futures rose marginally by US12 cents to US$98.67 per tonne, though higher supply from Australia and Brazil tempered gains.