Daily Market Reports | 8:21 AM
This story features WESTPAC BANKING CORPORATION, and other companies. For more info SHARE ANALYSIS: WBC
It was time to hit the pause button with US markets taking a more risk-off tone ahead of Wednesday’s FOMC meeting and a lack of any real news on tariffs. The ASX futures are pointing to a weaker open.
| World Overnight | |||
| SPI Overnight | 8152.00 | – 21.00 | – 0.26% |
| S&P ASX 200 | 8157.80 | – 80.20 | – 0.97% |
| S&P500 | 5650.38 | – 36.29 | – 0.64% |
| Nasdaq Comp | 17844.24 | – 133.49 | – 0.74% |
| DJIA | 41218.83 | – 98.60 | – 0.24% |
| S&P500 VIX | 23.64 | + 0.96 | 4.23% |
| US 10-year yield | 4.34 | + 0.02 | 0.49% |
| USD Index | 99.63 | – 0.22 | – 0.22% |
| FTSE100 | 8596.35 | + 99.55 | 1.17% |
| DAX30 | 23344.54 | + 257.89 | 1.12% |
Good morning,
Australian shares fell on Monday, after a seven-session rally, dragged down by a sell-off in banking stocks, with Westpac ((WBC)) shares leading the decline after slightly missing first-half profit expectations. Selling continued in the US overnight as markets took a breather.
What happened in markets overnight- Extract from NAB Markets Today Research
US equities broke a 9-day streak of gains. Yield movements were modest, with the US 10yr up 4bps to 4.34% and the curve steeper, with the 2yr up 1bp.
The dollar was -0.2% lower on the DXY as the yen gained 0.9% against the USD.
Oil prices slumped further following OPEC-plus’ decision to add more supply. Brent was -1.3% lower at US$60.3 after falling as low as US$58.50.
The S&P500 was initially down nearly -1% and was close to retracing all of those losses in the US afternoon, before a late sell-off saw the index close down -0.6%.
Losses were led by energy alongside lower oil prices. The Nasdaq was -0.7% lower. In late hours, Ford pulled its financial guidance and said auto tariffs would take a toll on profit.
On tariff headlines, Bessent said in an interview with CNBC that 17 countries had approached the Trump administration with “very good trade proposals” and that “we could see substantial progress in the coming weeks” between the US and China.
Trump said he would impose 100% tariffs on movies made overseas, though with little detail on how that would be implemented. He also said, “We’re going to meet with the industry. I want to make sure they’re happy with it, because we’re all about jobs.” Entertainment stocks generally underperformed.
The US Services ISM showed a surprise increase, rising to 51.6 from 50.8, against expectations for a small decline.
The business activity subindex did slip further, similar to the earlier indication from the services PMI, but new orders, employment, and supplier deliveries each rose and unwound at least part of their March falls.
The data provides some further encouragement that broader US activity wasn’t in freefall through April, even if it does little to argue against the theme of slower growth.
Of some concern, though, and highlighting the challenge facing the FOMC, prices paid rose to their highest since January 2023 at 65.1 from 60.9.
The ISM highlighted that “regarding tariffs, respondents cited actual pricing impacts as concerns, more so than uncertainty and future pressures”.
While broader market moves were modest, the Taiwan dollar was pulling attention. The TWD has jumped more than 7% in 2 days to a 3-year high.
A confluence of rising hopes of a trade deal with China, speculation that a stronger TWD could be part of trade discussions with the US, and chatter around a rush to reduce exposures by local exporters in Taiwan and life insurers (which tend to be under-hedged on their US debt holdings).
Bloomberg reports Taiwan’s monetary authority hadn’t been seen aggressively intervening in the market Monday to limit the TWD’s strength, though it typically does so to smooth out volatility. Officials pushed back on the currency being part of trade talks.
President Lai said the currency would “naturally not be mentioned in the negotiations between Taiwan and the United States”, the central bank urged against speculation, and the Office of Trade Negotiations said it had wrapped up a first round of tariff-reduction negotiations with the US and that the talks did not touch upon the issue of foreign exchange policy.
There was spillover into other Asian currencies. The AUD rose to an intraday high of 0.6494 and now sits around 0.6466, up 0.5%.
JPY is the strongest of the G10 currencies, with USD/JPY down to 143.76, reversing some of last week’s post-BoJ underperformance.
Finance Minister Kato said the country won’t use the sale of its US Treasury holdings as a bargaining tool in trade talks, walking back comments he made on Friday.
In other trade headlines, Kyodo News reported that in recent negotiations, the US has refused Japan a full exemption from the 10% tariff, an additional 14% country-specific tariff, and product tariffs on autos, steel, and aluminium, and is only considering extending the 90-day pause or lowering the 14% country-specific tariff, depending on progress in negotiations.
News in commodity markets: Extract from ANZ Bank Australian Morning Focus
Crude oil prices slumped as the market faces another acceleration in production hikes from OPEC.
The original phase-out of voluntary production cuts entailed a monthly rise of 138kb/d over 18 months. However, the group surprised the market in April when it announced it would triple that increase to 411kb/d in May.
It met on Saturday and agreed to extend that higher level into June. That means over 37% of the 2.2mb/d in production gains will have come in the space of two months.
Saudi Arabia, the de facto leader of the group, also warned the group’s overproducing members that it could amplify a historic shift in policy and deliver further production increases unless they comply with agreed quotas.
The higher-than-expected rise in supply comes amid darkening clouds over the global economy. President Trump’s trade war threatens to derail the economic growth that emerged late last year.
This sets the scene for ongoing downward pressure on oil prices.
However, fiscal breakeven costs for many OPEC members are relatively higher; we calculate around US$86/bbl across the group, up from US$70/bbl five years ago.
Global gas prices were steady as traders weighed the weak outlook for demand against renewed supply-side constraints. Concerns over demand have dominated sentiment over the past few weeks.
The European Union is set to impose measures to ban Russian imports by the end of 2027. It plans to propose in June a ban on all gas purchases under new deals with Russia and existing spot contracts, which account for about a third of imports, to take effect before the end of the year.
Gold prices rebounded from last week’s sell-off, in a sign the market remains unconvinced the risks around the trade war have subdued.
President Trump suggested his administration could strike trade deals with some countries as soon as this week. India floated zero tariffs on steel, auto parts, and drugs on a reciprocal basis in trade talks with the US.
However, he signalled there is no imminent accord with China. This should see haven buying remain elevated, which has driven gold to record high levels in recent weeks.
Meanwhile, the Fed is widely expected to hold rates steady on Wednesday. Fed Chair Powell said last week’s surprisingly strong jobs data meant there is no reason to cut rates.
Iron ore futures gained despite Trump warning the trade war has essentially stopped business between the US and China. China’s steel industry has little reliance on the US as an export destination.
However, a global trade war could disrupt its 810mt per year of exports to other international destinations. Meanwhile, the market is also hopeful that Beijing will provide further stimulus to support domestic demand.
Corporate news in Australia
-Gold Road Resources ((GOR)) has accepted a takeover offer from Gold Fields, valued at $3.7bn.
-Media reports suggest Qube Holdings ((QUB)) is considering a major acquisition to expand its New Zealand operations or pursue opportunities such as Brookfield’s 50% stake in Patrick Terminals.
-BYD is outselling Tesla at a six-to-one ratio in Australia.
On the calendar today:
-AU March Building Approvals
-AU March Household Spending
-JP Public Holiday
-CH April Caixin
-EZ April PMI
-EZ March PPI
-UK April PMI
-US April ISM Services
-US March Trade Bal
FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 3338.94 | + 81.94 | 2.52% |
| Silver (oz) | 32.61 | + 0.36 | 1.10% |
| Copper (lb) | 4.71 | + 0.01 | 0.15% |
| Aluminium (lb) | 1.11 | 0.00 | 0.00% |
| Nickel (lb) | 6.94 | – 0.02 | – 0.25% |
| Zinc (lb) | 1.19 | 0.00 | 0.00% |
| West Texas Crude | 57.19 | – 1.10 | – 1.89% |
| Brent Crude | 60.26 | – 1.03 | – 1.68% |
| Iron Ore (t) | 97.41 | – 0.78 | – 0.79% |
The Australian share market over the past thirty days
| Index | 05 May 2025 | Week To Date | Month To Date (May) | Quarter To Date (Apr-Jun) | Year To Date (2025) |
|---|---|---|---|---|---|
| S&P ASX 200 (ex-div) | 8157.80 | -0.97% | 0.39% | 4.01% | -0.02% |
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| AMC | Amcor | Upgrade to Add from Hold | Morgans |
| BBN | Baby Bunting | Upgrade to Buy from Accumulate | Ord Minnett |
| BDM | Burgundy Diamond Mines | Downgrade to Speculative Hold from Buy | Bell Potter |
| CPU | Computershare | Downgrade to Sell from Neutral | UBS |
| CRN | Coronado Global Resources | Downgrade to Speculative Hold from Buy | Bell Potter |
| CTD | Corporate Travel Management | Downgrade to Equal-weight from Overweight | Morgan Stanley |
| HLI | Helia Group | Downgrade to Underperform from Neutral | Macquarie |
| NST | Northern Star Resources | Downgrade to Hold from Buy | Bell Potter |
| RRL | Regis Resources | Downgrade to Hold from Buy | Bell Potter |
| Downgrade to Neutral from Outperform | Macquarie | ||
| SGH | SGH Ltd | Downgrade to Hold from Buy | Bell Potter |
For more detail go to FNArena’s Australian Broker Call Report, which is updated each morning, Mon-Fri.
All overnight and intraday prices, average prices, currency conversions and charts for stock indices, currencies, commodities, bonds, VIX and more available on the FNArena website. Click here. (Subscribers can access prices on the website.)
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