The ASX looks set to slip today when trade begins, with futures down 12 points or 0.17% to 7,233 early this morning.
It was quiet overnight on Wall Street, with US equity markets closed for the Independence Day public holiday.
The dust has begun to settle on the Reserve Bank of Australia’s decision to keep interest rates on ice for the first time in 13 months, though most pundits still think there are more rises in our future, with the bank maintaining its tightening bias.
Experts suggest that the RBA's shift towards active Quantitative Tightening (QT) may help curb inflation.
What’s happening on the markets?
Turning to market indicators, the Dow Jones and S&P 500 edged up by 0.03% and 0.12%, respectively.
The Nasdaq and Russell 2000 performed slightly better, with gains of 0.21% and 0.43%, respectively.
Gold prices rose by 0.21%, reaching US$1,933.50 per ounce, while WTI oil prices increased by 1.72% to US$70.99 per barrel.
However, iron ore prices experienced a slight decline of 0.75% to US$110.87 per tonne.
The Australian dollar remained stable at 0.6692 US cents and Bitcoin dipped by 0.83% to A$46,036.
In the tech sector, Facebook (NASDAQ:META) is preparing to launch a new app called Threads, which will resemble Twitter. The social media behemoth says it aims to offer users a more focused and intimate experience with the new chat platform.
China imposes new export bans
On international markets, China has announced the imposition of export restrictions on two niche battery metals, gallium and germanium.
These metals are crucial components for chips, electric vehicles (EVs) and telecommunications. While not rare, their production process is complex and costly. China currently dominates global output, accounting for more than 80% of production.
The export restrictions are expected to impact Europe, as the EU imports 71% of gallium and 45% of germanium from China.
For its part, the US plans to restrict China's access to cloud computing services.
Looking ahead, the economic calendar includes important events such as the release of the Australia AI Group Industry Index and China's Caixin Services PMI this morning. The FOMC Minutes are set to be published this afternoon.
In global economic news, the UK mortgage five-year rate has surpassed 6% for the first time this year and South Korea's inflation has cooled more than expected in June.
European stocks closed lower on concerns about further tightening measures from the Central Bank and the Bank of Europe. Still on the continent, power prices have dropped below zero due to a surge in solar output.
Stagflation for the US?
US ISM Manufacturing PMI data revealed a deepening contraction in June, marking the lowest level since May 2020.
This eight-month streak below the 50 threshold, indicating contraction, is the longest since the Global Financial Crisis.
Conflicting economic data suggests that while the ISM survey implies a recessionary economy, other indicators such as nonfarm payrolls, unemployment benefit applications, and housing starts indicate a steady but slow-growing economy.
The prices paid component of the PMI fell to a level typically associated with close-to-zero CPI inflation. This signals increasing risks of both recession and disinflation.