The Australian sharemarket is expected to edge lower on Tuesday, with futures pointing to a 6-point, or 0.1%, fall at the open as investors await the Reserve Bank of Australia (RBA)’s latest interest rate decision.
The RBA will announce its decision at 2.30pm AEST following its 2-day policy meeting, with economists and money markets broadly expecting the central bank to leave the cash rate unchanged at 4.35%.
Reporting season is also gathering pace, with Southern Cross Media Group, Life360, Helia Group and SGH among companies due to report today.
The NAB business confidence survey for July is also scheduled for release.
ASX falls as banks weigh on market
The S&P/ASX200 started the week on the back foot, falling 31 points, or 0.3%, to 9232.6 on Monday, while the broader All Ordinaries lost 21.1 points, or 0.2%, to 9424.
Financial stocks were among the main drags after Westpac fell more than 5% following a 20% decline in third-quarter mortgage applications after the May federal budget, raising questions about the outlook for bank earnings.
IG market analyst Tony Sycamore said traders had been preparing for budget-related effects to emerge through the banking sector.
“Impacts on property prices, credit growth and removing investors from the market, that’s going to flow through to the banks,” Sycamore said.
Communications and healthcare stocks provided some support, with both sectors gaining at least 1.5%.
ResMed and Seek were among the stronger performers, while Car Group jumped 10% after reporting a strong full-year profit.
Miners also helped offset weakness in financials as gold and lithium prices strengthened. BHP and Rio Tinto advanced despite a sharp pullback in copper prices late last week.
Energy stocks ended broadly flat as oil prices eased from an earlier spike, although uranium and coal names outperformed. Paladin Energy rose more than 2%, while Bannerman Energy gained more than 4%.
Among individual companies, Treasury Wine Estates flagged $558.4 million in writedowns and impairments as it moves to streamline its US supply chain.
I Squared Capital agreed to acquire oOh! Media in a $1 billion transaction following a lengthy bidding contest involving Oaktree Capital and Pacific Equity Partners.
Tabcorp shares also advanced after the company confirmed its $267 million acquisition of wagering technology provider BetMakers.
Wall Street slips after record run
US sharemarkets finished lower after a recent rally pushed the S&P 500 and Dow Jones to record highs, with investors balancing renewed Middle East tensions against expectations for key inflation data and corporate earnings.
The Dow Jones Industrial Average fell 0.1%, the S&P 500 lost 0.1% and the Nasdaq declined 0.3%.
Energy stocks outperformed as oil prices climbed, with the S&P 500 energy index gaining 4.6% and Exxon Mobil rising 4.4%.
Those gains were offset by weakness in real estate, utilities and technology.
The information technology index fell 1.1%, with Apple down 1.5% following a broker downgrade, Intel losing 4.1% after launching a US$15 billion stock offering and Nvidia falling 2.9%.
eBay dropped 3.8% after reports GameStop chief executive Ryan Cohen was considering withdrawing the company’s US$56 billion bid.
Trade Desk fell 3% following broker downgrades after its Friday results, while Verisk Analytics slid 6% after a court rejected its attempt to terminate a merger with AccuLynx.com.
US government bond yields also moved higher ahead of key inflation releases.
The US 10-year Treasury yield rose 4 basis points to 4.70%, while the 2-year yield also gained 4 basis points to 4.24%.
European markets hold near record highs
European sharemarkets were broadly steady as investors paused ahead of a busy week of economic data.
The FTSEurofirst 300 index edged 0.1% higher, while the UK FTSE 100 fell 0.4%.
Basic resources stocks rose 0.9% as copper and precious metal prices strengthened, while technology shares gained 0.3%.
Telecommunications was the weakest sector, falling 2.1%, with Deutsche Telekom down 3.2% and Vodafone losing 3.1%.
Media stocks fell 1.6%, led by a 5% decline in WPP and a 1.4% fall in Publicis Group.
Plus500 rose 2.1% after reporting higher half-year core profit, supported by stronger trading activity, expansion in the US and new product launches.
Currencies ease against US dollar
Major currencies weakened against the US dollar.
- The euro fell 0.2% to US$1.1542.
- The Japanese yen dropped 1% to JPY159.33.
- The Australian dollar slipped 0.2% to US70.54 cents.
Oil surges as Hormuz tensions persist
Global oil prices jumped as negotiations over reopening the Strait of Hormuz remained unresolved.
Brent crude futures settled 5% higher at US$87.72 a barrel after Iran and the US exchanged demands over compensation, sanctions and conditions for reopening the key shipping route.
The uncertainty added to concerns over potential disruptions to global energy supplies.
Copper, aluminium and gold gain
Base metals moved higher, with copper futures reaching another record high after gaining 0.4%.
- Aluminium futures rose 1.8%, supported by continued declines in exchange inventories.
- Gold futures also advanced, rising 0.5% to US$4,420 an ounce and remaining near a 7-week high as investors positioned ahead of US inflation data.
- Iron ore futures were little changed, adding 0.1% to settle at US$94.55 a tonne.
Looking ahead
In Australia, attention will centre on the RBA’s interest rate decision, with markets expecting the cash rate to remain at 4.35%.
The NAB business confidence survey for July is also due, while Life360, Helia Group and SGH are among companies scheduled to report earnings.
In the US, investors will be watching the NFIB small business index and existing home sales data.