Australian shares are set to open lower, with ASX 200 futures down 43 points (-0.67%) to 8,822 as of 8:30 am AEST. The pullback follows a muted Friday session on Wall Street, where the S&P 500 slipped 0.05% and the Dow lost 0.6%, while the Nasdaq managed another record high thanks to ongoing strength in Big Tech.
Friday had been a positive finish locally, with the ASX 200 up 0.7% to close the week just shy of 8,865 points, led by gains in financials, resources and another strong push from gold miners. But the tone has turned more cautious to start the new week as traders brace for a pivotal US Federal Reserve meeting on Wednesday. A quarter-point rate cut is widely expected, with markets pricing in as much as 75 basis points of easing by year-end.
Wall Street looks to the Fed
Overnight trade was relatively quiet, with US equities drifting sideways after last week’s rally. Breadth was negative, with the equal-weighted S&P 500 down 0.7%, underscoring how reliant the market remains on a handful of mega-cap names.
The Nasdaq rose 0.4% to notch another record, supported by continued enthusiasm around AI and cloud computing. The tech rally shows no sign of fading, fuelled by Oracle’s bullish forecast, Nvidia’s signs of unrelenting demand and Apple’s latest iPhone launch. Microsoft was also in the spotlight amid reports it may take a US$100 billion stake in OpenAI.
Bond markets were less upbeat, with US 10-year Treasury yields rising to 4.06% as investors weighed softer consumer sentiment data and the looming Fed decision. Futures remain fully priced for a 25-basis-point cut, with debate now focused on whether Powell hints at a faster easing cycle into year-end.
ASX and small caps
Locally, the ASX wrapped up last week in the green, though sector performance was mixed. Materials (+1.5%), real estate (+1.3%) and financials (+1.2%) led Friday’s gains, offsetting weakness in energy (-2.4%) and consumer discretionary (-0.7%). Gold miners were again standouts, with the sub-index up 2.1% as bullion edged closer to record highs.
Today’s session is likely to be more subdued, with futures pointing to broad weakness across the board. Investors will be watching for Chinese industrial production, retail sales and property market data at midday, which could set the tone for commodity prices. Domestically, the calendar is light until Thursday’s jobs data.
Commodities and currencies
Commodity markets were steady overnight. Gold inched 0.04% higher to US$3,642 an ounce, while copper was flat at US$4.58 a pound. Oil eased slightly, with WTI holding at US$62.56 a barrel and Brent at US$66.92. Iron ore futures rose 0.2% to US$105.43 a tonne on Friday, supported by optimism around Chinese demand and supply concerns out of Guinea.
The Australian dollar is trading at US66.5 cents, little changed against the greenback, while Bitcoin is sitting near US$116,000.
On the agenda today
It’s a relatively quiet start to the week for local investors. On the corporate side, ANZ has agreed to a $240 million settlement with ASIC over multiple compliance breaches, while Woodside has received final government approval to extend its North West Shelf project. Gold Road has trimmed its production guidance, and Retail Food Group has announced a CEO change.
Later this week, the spotlight will swing firmly back to central banks, with the Fed’s rate decision on Wednesday followed by policy updates from the Bank of England, Bank of Japan and Bank of Canada. Locally, Thursday’s labour force data will be the key event.