The ASX Futures are pointing to a potential lift in today’s trading, up just 1.00 points or less than 0.1%.
All eyes will be on the RBA meeting, scheduled for today at 2:30 PM AEST.
A very slim majority of panellists (51%, 20/39) from Finder's RBA Cash Rate Survey™ believe the RBA will increase the cash rate in July, leaving 49% (19/39) forecasting a hold.
Fears of a recession have been growing with each rate hike – economic data is sending mixed signals, with monthly CPI 0.5% below expectations and GDP growing only 0.2% compared to an expected 0.3%.
On the other hand, jobs data has been strong and retail sales stronger than expected (0.7% vs 0.1%), two things the RBA has been strongly focused on in recent months despite evidence those spending the most are least effected by rate hikes.
About a third of Australian households own their homes outright and are unaffected by interest rate hikes – many in this cohort also own investment properties and are benefiting from increased rents.
Of those over 55, 62% owned their home outright in 2016.
An analysis of 7 million Commonwealth Bank customers’ spending habits revealed those under 35 increased their spending only 3.4% in the year to March – despite inflation of more than 7% – indicating young people are spending less in real dollars than the year before.
In contrast, the increased spending rate of those over 55 climbed higher than inflation this year, and those over 75 are dishing out a 13% increase in cash flow into the economy.
All-in-all, interest rate hikes alone seem a very blunt instrument for controlling something as complex as inflation.
Market movements overnight
Here's what we saw (source Commsec):
US markets
US markets shrugged off concerns regarding slower economic growth and declining manufacturing activity overnight. Despite the quieter trading ahead of the Independence Day holiday, key indices managed to edge higher.
Tesla (NASDAQ:TSLA)'s record quarterly sales propelled a 6.9% boost in its shares, subsequently lifting those of competitors Rivian Automotive and Lucid between 7.3% and 17.4%.
US banks also found favour, with shares rising following dividend increases backed by successful Federal Reserve health checks. Wells Fargo (NYSE:WFC) and Citigroup (NYSE:C) saw upticks of 1.7% and 1.5%, respectively, with the broader S&P 500 banks index also rising by 1.5%.
Apple shares (NASDAQ:AAPL), however, slipped by 0.8% amid reports of production cuts for the iPhone maker's Vision Pro headset.
At the close, the Dow Jones and the S&P 500 indices posted minor gains of less than 0.1%, while the Nasdaq added 29 points, translating to a 0.2% increase.
Yields on US government bonds advanced, with the 10-year Treasury yield lifting by 4 points to 3.86% and the 2-year Treasury yield up by 6 points to 4.94%.
The US manufacturing sector's ongoing slump seemed to do little to dampen investor sentiment.
European markets
Markets across Europe experienced modest losses in Monday's uneven trading session, led by a slump in healthcare shares despite gains in mining (+2.2%) and energy (+1.6%) sectors on extended oil supply cuts from Russia and Saudi Arabia.
However, a disappointing lung cancer trial result for AstraZeneca (NASDAQ:AZN) caused an 8% drop in its shares, leading to a 2% decline in the broader healthcare sector.
The FTSEurofirst 300, declined 0.2% whilst the UK FTSE 100 saw a dip of 0.1% as pharmaceuticals fell by 5.4%.
Oil, currency and minerals
In currency markets, the Euro and Aussie dollar strengthened against the US dollar, while the Japanese yen also firmed.
The Euro rose from US$1.0870 to US$1.0929 and was near US$1.0910 at the US close.
The Aussie dollar lifted from US$0.6639 cents to US$0.6689 cents and was near US$0.6670 cents at the US close.
The Japanese yen firmed from 144.91 yen per US dollar to JPY144.04 and was near JPY144.70 at the US close.
Despite an extension of oil supply cuts by Saudi Arabia and Russia, global oil prices receded around 1%, as concerns over a slowing global economy and potential US interest rate hikes loomed large.
Brent crude and US Nymex saw respective falls of US$0.76 and US$0.85, a 1% and 1.2% drop per barrel, respectively.
Base metal prices had a mixed day, with copper futures climbing by 1% on hopes of Chinese economic stimulus, while aluminium futures shed 0.1%. Gold futures saw a minimal rise of less than 0.1% to US$1,929.50 an ounce.
Finally, iron ore futures slipped US$0.84 or 0.8% to US$110.87 a tonne, reflecting concerns about a seasonal slowdown intensified by China's gradual economic recovery.
What’s happening with small caps?
Critical minerals have been the name of the game lately in the small-cap arena, with a particular focus on battery-related minerals.
Sipa Resources Ltd (ASX:SRI) is on the hunt for rare earth elements (REEs) at its Wolfe Basin Project southwest of Halls Creek, Western Australia. A review of historical drill data at the project has pointed to the presence of elevated REE levels, with one aircore drilling sample intersecting 16 metres at 650 parts per million rare earth oxides.
Southern Gold Ltd (ASX:SAU) is approaching the battery metals boom from a different direction, having today completed the acquisition of Iondrive Technologies Pty Ltd, a battery technology company with three licences over next-generation batteries developed by the University of Adelaide.
Dynamic Metals Ltd (ASX:DYM) has unearthed some particularly high-grade nickel at its Widgiemooltha Project’s Dordie Far West prospect, where recent drilling revealed mineralisation of 16 metres at 1.96% nickel from 27 metres of depth, with a higher-grade portion of 5 metres at 2.84% nickel.
Finally, the Western Australian government has approved Buru Energy Ltd (ASX:BRU, OTC:BRNGF)’s Declaration of Location application for the Rafael gas and condensate discovery, where independent assessment has revealed potential for more than one trillion cubic feet of gas and 20 million barrels of condensate.