The Australian sharemarket is expected to open higher today, with futures pointing to a gain of 41 points, or 0.5%, following a stronger finish on Wall Street and further gains across oil, gold and base metals.
The firmer opening signal comes after a difficult fortnight for Australian equities, with investors contending with elevated oil prices, concerns about US bond markets and sustained weakness across the major banks.
Reporting season will remain firmly in focus, with PLS, Bendigo and Adelaide Bank (ASX:BEN), Ampol, Data#3, NIB, Reece and Endeavour Group among companies scheduled to release results today.
Woodside Energy and Coles Group report on Tuesday, followed by Woolworths on Wednesday and Wesfarmers on Thursday.
ASX ends second straight week lower
The S&P/ASX 200 fell 24.9 points, or 0.27%, on Friday to 9,058.9, while the All Ordinaries declined 28.8 points, or 0.31%, to 9,269.7.
The benchmark has fallen almost 2.5% since reaching record highs earlier in August, with concerns about the housing market triggering a sell-off in banking stocks that has weighed heavily on the index during earnings season.
Financial stocks edged 0.2% higher on Friday but have lost more than 8% over the past two weeks after major banks reported a sharp slowdown in home loan applications following May’s Federal Budget.
Property stocks fell 2.4% and consumer discretionary shares declined 1.8%, while investors also took profits in healthcare following its recent rally.
Resources offered support, gaining 5.5% over the week, while gold stocks advanced for a third consecutive week as concerns around US debt and Treasury yields supported demand for bullion.
Energy stocks have now risen in seven of the past eight weeks as oil prices strengthened amid US threats to broaden sanctions against Iran and its trading partners.
Reporting season produced sharp stock-specific moves. TPG Telecom, Guzman y Gomez (ASX:GYG) and Regis Resources gained after delivering well-received results, while Charter Hall, Perpetual, GQG Partners, ARN Media and Inghams fell after disappointing investors.
Wall Street finishes higher
US markets closed higher on Friday, although the major indices still finished lower for the week as investors remained cautious over volatile Treasury yields and uncertainty surrounding developments in the Middle East.
Sentiment improved after economic data showed US services activity expanding at its strongest pace in almost two years, driving a sharp acceleration in overall business activity during August.
The stronger services reading offset slower manufacturing growth, which continued to be affected by reduced inventory building and supply disruptions linked to the Iran war.
The Dow Jones Industrial Average rose 1%, while the S&P 500 and Nasdaq both gained 0.4%.
Materials led the S&P 500 sectors with a 2.2% rise, while utilities fell 2.3%.
Ross Stores gained 4.4% after raising its annual profit forecast and beating quarterly expectations.
Crypto-linked stocks also rallied as Bitcoin climbed to its highest level since mid-May. Robinhood surged 14%, Coinbase Global rose 8% and Strategy gained 6% after President Donald Trump urged Congress to pass cryptocurrency legislation.
Bitcoin has risen almost 20% over the past week to around US$75,400, marking its strongest weekly performance in almost a year.
US Treasury yields moved higher following the services data, with the 10-year yield up 4 basis points to 4.74% and the 2-year yield rising 5 basis points to 4.24%.
European markets advance
European sharemarkets also finished higher on Friday as investors focused on signs of economic resilience, although the benchmark index still ended the week lower amid concerns over elevated oil prices and Treasury yields.
Eurozone business activity expanded at its fastest pace this year, supported by improving manufacturing orders and renewed export growth.
Basic resources led sector gains with a 2.5% rise as a weaker US dollar supported metals prices, while luxury stocks rebounded 1.4%.
Retailers added 1%, with JD Sports climbing 5.6% after falling 14% in the previous session when the sportswear retailer lowered its annual profit forecast.
The FTSEurofirst 300 gained 0.5%, while London's FTSE 100 advanced 0.6%.
Currencies
Currency markets were relatively steady against the US dollar.
- The euro was trading around US$1.1674.
- The Japanese yen stood at ¥158.92 to the dollar.
- The Australian dollar was buying around US71.65 cents, extending its gains from US71.22 cents late last week.
Commodities strengthen
Oil prices continued to rise after Trump threatened economic sanctions against Iran's trading partners, increasing expectations that global supply could tighten.
- Brent crude settled 0.7% higher at US$94.39 a barrel.
Base metals also strengthened.
- Copper futures gained 1.8%, supported by a weaker US dollar and China's pledge to use fiscal measures to strengthen economic growth.
- Aluminium surged 4.5% as rising tensions involving Iran added to supply concerns.
- Gold futures rallied to their highest level in more than three months, gaining 2.4% to settle at US$4,681 an ounce, supported by the softer dollar and continued safe-haven demand.
- Iron ore futures were broadly steady, edging 0.1% higher to US$95.21 a tonne.
Looking ahead
Australian reporting season remains the major domestic focus this week, while US investors are preparing for Nvidia's earnings, due Thursday morning Australian time.
With markets continuing to navigate elevated energy prices, shifting bond yields and geopolitical uncertainty, the combination of corporate earnings and US economic signals is likely to remain central to sentiment.