The Australian sharemarket is expected to open lower on Monday, with futures pointing to a fall of 36 points, or 0.4%, as investors turn their attention to this week’s GDP data and the outlook for interest rates.
The S&P/ASX 200 finished last week 33 points, or 0.37%, higher at 9,092, snapping a two-week losing run as gains on Wall Street and a solid earnings season helped offset concerns about hotter-than-expected July inflation.
Materials led the market with a 2.50% weekly gain, followed by Consumer Staples at 1.82% and Health Care at 1.11%.
Bapcor was the standout performer, jumping 58.43%, while Articore rose 51.79% and Nuix gained 46.67%.
Nanosonics was among the weakest, falling 24.79%, followed by Kogan, down 18.40%, and PEXA Group, which lost 17.53%.
With reporting season largely complete, attention now shifts to Wednesday’s June-quarter GDP release.
The economy grew 0.3% quarter-on-quarter in the March quarter, with annual growth at 2.5%.
Expectations are for June-quarter growth of 0.4% and annual growth of 1.9%. A quarterly result of 0.2% or weaker could give the Reserve Bank of Australia reason to reconsider another rate rise after last week’s firm inflation data.
Rates markets are currently pricing around 12 basis points of tightening for the September meeting and a full 25-basis-point hike by November 3.
Private sector credit and the Melbourne Institute inflation gauge are due today, while Monash IVF, Star Entertainment, Coventry Group and Michael Hill are scheduled to report earnings.
Wall Street slips after Jackson Hole
US equities finished lower on Friday after Federal Reserve chair Kevin Warsh struck a hawkish tone in his maiden Jackson Hole speech, stressing that the Fed’s 2% inflation target remained non-negotiable.
Despite Friday’s weakness, the major indices still recorded weekly gains, with the S&P 500 up 0.50%, the Nasdaq 100 gaining 0.43% and the Dow Jones adding 0.53%.
Rates markets responded by increasing expectations for tightening, with around 15 basis points of hikes now priced for September and 37 basis points by the end of 2026.
Nvidia fell 4.57% to US$217.55, giving back more than half of Thursday’s post-earnings surge.
Marvell Technology dropped 10.3% and Arm Holdings fell 6.33%.
The key US event this week will be Friday’s August non-farm payrolls report. Economists expect around 55,000 jobs to have been added, with unemployment seen edging back towards 4.2%.
Europe rebounds
European markets finished higher on Friday, with France’s CAC 40 gaining around 1% as it recovered from the previous session’s sell-off.
French banks were among the strongest performers, although sentiment was tempered by a downward revision to France’s second-quarter GDP growth, which was cut to flat from an initial estimate of 0.2%.
The FTSEurofirst 300 rose 0.5% and the UK FTSE 100 gained 0.3%.
Currencies mixed
The euro was trading around US$1.1580 this morning, while the Japanese yen was at ¥160.11 per US dollar.
The Australian dollar was changing hands at around US$0.7154.
Gold falls sharply
Commodity markets were mixed as investors reassessed the outlook for interest rates.
- Brent crude settled 0.4% lower at US$89.31 a barrel.
- Copper futures fell 0.4%, while aluminium gained 0.6%.
- Gold futures dropped 2.9% to US$4,529 an ounce as traders increased bets on tighter US monetary policy.
- Iron ore futures rose 0.6% to US$95.84 a tonne, supported by destocking at major Chinese ports.