Cooler-than-expected US employment data have signalled inflationary pressures on the economy are easing. The news led Wall St to its best day in more than two months. The S&P 500 rose 1.3%, with the benchmark index erasing its losses for the week.
As such, we expect to see the ASX rise today. ASX 200 futures are up 0.3% to 7,666 points.
The ASX200 finished 0.70% higher last week at 7,629, boosted by gains on Wall Street and a weaker-than-anticipated Australian retail sales report for March, which tempered expectations around the possibility of another RBA rate hike.
Real Estate was 3.14% higher, IT gained 2.31%, Consumer Discretionary made 2.14% and Financial Sectors was up 1.33%. Consumer Staples lost 2.28%, Energy dropped 1.81%, Materials dipped 0.30% and Utilities fell 0.20% for the week.
“The main event on this week's local calendar is Tuesday's RBA Board meeting where the RBA is expected to keep rates on hold at 4.35%,” IG Markets analyst Tony Sycamore said.
“In the lead-up, firmer than expected Australian inflation and employment data have resulted in the Australian interest rate market swinging from pricing in RBA rate cuts this year to pricing in a 33% chance of a 25bp rate hike, before year-end.
“While we think that the bar to another RBA rate hike is very high, we acknowledge the window for RBA rate cuts in 2024 has narrowed and have pushed back our call for a first RBA rate cut from August until November.”
What happened last week
(source Commsec)
US markets
Surged on Friday after the US economy added the fewest number of jobs in six months in April, bolstering the case for interest rate cuts from the US central bank. Biotech firm Amgen (NASDAQ:AMGN) jumped 11.8% after encouraging interim data on its experimental weight-loss drug MariTide and first-quarter earnings.
Apple (NASDAQ:AAPL) gained 6% as the iPhone maker unveiled a record US$110 billion share buyback program and beat quarterly expectations.
- The Dow Jones index rose by 450 points or 1.2%.
- The S&P 500 index gained 1.3% - the most since February.
- The Nasdaq index added 315 points or 2%.
- For the week, the Dow and Nasdaq rose 1.1% and 1.4%, respectively, while the S&P 500 added 0.6%.
European markets
Advanced on Friday, boosted by a 1.7% gain in technology stocks following an upbeat quarterly sales forecast from Apple.
- The continent-wide FTSEurofirst 300 index rose 0.4% but still ended the week down 0.6%.
- In London, the UK FTSE 100 index jumped 0.5%, hitting a fresh record high, after Anglo-American shares lifted 1.2% on reports that Glencore (LON:GLEN) was considering making a bid for the mining giant. The UK benchmark was up 0.9% for the week.
Currencies
Were stronger against the US dollar in European and US trade.
- The Euro rose from US$1.0723 to US$1.0806 and was near US$1.0760 at the US close.
- The Aussie dollar lifted from US65.66 cents to US66.44 cents and was near US66.10 cents at the US close.
- The Japanese yen firmed from 153.31 yen per US dollar to JPY151.86 and was near JPY153.00 at the US close.
Commodities
Global oil prices settled lower on Friday and posted their steepest weekly loss in three months as investors weighed weak US jobs data and the possible timing of a US Federal Reserve interest rate cut.
- The Brent crude price fell by US71 cents or 0.8% to US$82.96 a barrel.
- The US Nymex crude price slid US84 cents or 1.1% to US$78.11 a barrel.
- For the week, Brent declined 7.3%, while the Nymex fell 6.8%.
Base metal prices rose on Friday, supported by a softer US dollar after a weaker-than-expected US jobs report.
- Copper futures rose 1.8% and aluminium futures added 0.8%. For the week, copper edged up 0.1% with aluminium down 1.7%.
- The gold futures price fell US$1.00 or less than 0.1% to US$2,308.60 an ounce on Friday, despite weaker-than-expected US jobs data.
- Spot gold was trading near US$2,302 an ounce at the US close. Bullion lost 1.6% over the week.
- Iron ore futures dipped US5 cents or less than 0.1% to US$118.03 a tonne on Friday. Chinese markets were closed for a public holiday. Iron ore was up 7.1% for the week.
What's next for Australian market?
Wealth Within chief analyst Dale Gillham looks at what’s ahead for the Australian stock market in the coming weeks.
“With the All-Ordinaries Index showing a slight decline last week, the market appears to be at a critical juncture, with neither buyers nor sellers able to assert dominance. This suggests a pivotal moment in the market's trajectory may be imminent.
“In my previous report, I highlighted 7,800 points as a key support level, and interestingly, since mid-April, the market has consistently held above this level, indicating strong support. However, despite several attempts in the last two weeks, the market has failed to break above the 8,000 point level, leading to a sideways movement.
“It is evident that the market is at a crossroads and is poised for a decisive move in either direction. The longer the sideways movement persists, the more powerful the eventual breakout will likely be.
"The question now is, which way is it likely to break? Historically, the market tends to form a low during the May-June period. Therefore, based on this pattern, the probability of a downward breakout appears higher.
“This scenario also aligns with my previous forecast of a downward move in May and June towards the 7,500 or 7,200 level. However, if the market manages to stay above the 7,800 level and breaks above 8,000 points in the coming weeks, it could reignite a bullish trend.
“I would encourage traders and investors to closely monitor price action for any clues about the market's next move, as I believe it will be significant. However, I do caution anyone thinking of jumping in too early. There will be plenty of time to profit when the bull run confirms it is back.”
What about small caps?
The S&P/ASX Small Ordinaries finished 0.86% higher on Friday to 3,001.90. The index was 1.25% higher for the week.
It has been a quiet start on the news front this morning, but you can read about the following and more throughout the day.