Australian shares are expected to open slightly weaker on Monday, with futures pointing to a 0.4% fall at the opening bell as investors digest last week’s gold-led rally.
The Australian dollar was trading higher at around US69.38 cents at 6am AEDT, while attention turns to domestic data including the Melbourne Institute inflation gauge for June and ANZ job advertisements.
Later in the week, markets will watch May building approvals and a speech from RBA assistant governor Sarah Hunter in Canberra, which could provide further clues on the economic and interest rate outlook.
ASX enjoys best session in three weeks
The Australian sharemarket finished last week on a strong note, recording its best day in three weeks as gold miners surged following softer US employment data.
The benchmark S&P/ASX200 rose 119.9 points, or 1.37%, to 8,844.4 on Friday, while the broader All Ordinaries gained 117.4 points, or 1.31%, to 9,048.3.
It was the ASX200’s strongest session since June 12, when it rose 1.98%, and helped the index close the week 0.92% higher.
AMP chief economist Shane Oliver said gains across healthcare, mining, information technology and financial stocks more than offset weakness in utilities and property shares.
Gold miners were the standout performers after weaker-than-expected US jobs data reduced expectations of a near-term Federal Reserve rate hike. Gold briefly climbed back above US$4,200 an ounce for the first time in 11 days before easing to US$4,171 by 5pm.
Northern Star jumped 11.8%, Evolution Mining rose 8.8% and Capricorn Metals gained 10.1%. Smaller producers also rallied after production updates, with Catalyst Metals up 19.2%, Genesis Minerals (ASX:GMD) rising 16.7% and Vault Minerals advancing 8.1%.
Elsewhere in resources, BHP added 1.6% to $60.50, Rio Tinto was broadly flat at $171.16 and Fortescue fell 3.2% to $18.36.
Financials were mixed. Insurance stocks softened on expectations that lower US rates would weigh on returns from short-term investments held against claims. Suncorp fell 3.7%, while IAG and QBE each lost 1.0%.
The major banks were stronger, with ANZ up 1.4% to $35.26, CBA rising 2.4% to $165.02, Westpac adding 0.7% to $35.69 and NAB gaining 0.4% to $38.57.
In real estate, PEXA Group plunged 18.9% to an all-time low of $8.80 after a NSW regulator recommended a cap on digital conveyancing fees, which the company said could cost it $70 million in revenue.
US markets closed for holiday
US sharemarkets were closed on Friday for the Independence Day long weekend, leaving investors to focus on futures trading and upcoming economic data.
US futures were mostly higher in holiday trade, with Dow futures flat, S&P 500 futures up 0.4% and Nasdaq futures rising 1.2%.
The ISM Services Purchasing Managers Index for June is due today, while later in the week investors will turn to minutes from the Federal Reserve’s latest meeting for signs on the path of interest rates.
The minutes will be closely watched as the first under new Fed chairman Kevin Warsh and may offer clues on how close policymakers are to lifting rates.
A major month of US second-quarter earnings also begins this week, with PepsiCo and Delta Air Lines reporting on Thursday and Friday before the major US banks follow next week.
Consensus forecasts point to S&P 500 earnings rising 23.9% year-on-year in the June quarter, with 10 of the 11 sectors expected to deliver growth. Energy, information technology and materials are tipped to lead gains, while healthcare is the only sector forecast to report a year-on-year decline.
Europe hits record highs
European markets pushed higher on Friday, with pan-European indices touching an intraday record high and posting their strongest weekly gain in more than a month.
The rally was supported by cyclical stocks and investor expectations that the Federal Reserve may not move quickly to raise interest rates.
Germany’s DAX also reached an all-time high and closed 0.8% stronger. Siemens rose 2.6% after a broker upgrade and was the biggest contributor to the index’s gain.
Semiconductor names also performed strongly, with Aixtron up 6%, Soitec adding 5% and BE Semiconductor rising 4.2%.
Defence stocks gained 0.7% as geopolitical tensions remained in focus after Russia launched its deadliest strike on Ukraine this year, reinforcing expectations of increased defence spending.
French voucher and benefits company Pluxee climbed 7.8% after reporting a smaller-than-expected decline in third-quarter organic sales.
The continent-wide FTSEurofirst 300 closed 0.7% higher, while the UK FTSE 100 advanced 0.3%.
In Europe today, the May Producer Price Index is due. The April reading was 4.9%, with investors watching for signs that price pressures are easing after recent eurozone data showed inflation rose at a slower-than-expected pace in June.
Currencies mixed
Currencies were mixed against the US dollar in early Monday trade.
- The euro was steady at US$1.1435.
- The Japanese yen weakened to ¥161.31.
- The Australian dollar was slightly lower at US69.36 cents after earlier trading around US69.38 cents.
Commodities trade limited
Commodity futures markets, including oil, base metals, gold and iron ore, were only partially open on Friday due to the US holiday.
The official trade date for transactions from July 3 will be July 6, meaning investors will be watching Monday’s session for a clearer read on commodity pricing momentum.
Gold remains in focus after its brief move back above US$4,200 an ounce last week helped fuel a strong rally across Australian gold equities.