Daily Market Reports | May 08 2025
This story features MACQUARIE GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: MQG
The Australian market moved higher yesterday after posting two days of back-to-back losses. The ASX200 is pointing to a slightly higher open on Thursday with US markets trending up after the FOMC meeting, which delivered no surprises.
| World Overnight | |||
| SPI Overnight | 8188.00 | + 8.00 | 0.10% |
| S&P ASX 200 | 8178.30 | + 26.90 | 0.33% |
| S&P500 | 5631.28 | + 24.37 | 0.43% |
| Nasdaq Comp | 17738.16 | + 48.50 | 0.27% |
| DJIA | 41113.97 | + 284.97 | 0.70% |
| S&P500 VIX | 23.55 | – 1.21 | – 4.89% |
| US 10-year yield | 4.28 | – 0.03 | – 0.77% |
| USD Index | 99.73 | + 0.74 | 0.74% |
| FTSE100 | 8559.33 | – 38.09 | – 0.44% |
| DAX30 | 23115.96 | – 133.69 | – 0.58% |
Good Morning,
Markets remain resilent to discordant tariff narratives coming from the US Administration with China’s PBOC easing financial conditions ahead of talks with the US in Switzerland this weekend. Back home, the banks continue releasing earnings reports with quarterly and trading updates revealing a more subdued Ausssie consumer.
What happened in Australia yesterday
The Australian share market rose on Wednesday snapping the 2-session losing streak. The ASX200 closed 27pts or 0.3% higher to 8.178. Nine of 11 sectors were higher. Energy rose 2.1% and gained most while healthcare fell -1.5%.
What happened overnight: Extract from NAB Markets Today Research
Early this morning and as widely expected the FOMC left the funds rate unchanged for a third consecutive meeting.
The Statement noted a shift in the economic assessment adding a new line that the Committee “judges that the risks of higher unemployment and higher inflation have risen”.
In line with market consensus, the FOMC left the funds rate unchanged at 4.50-4.25%. The decision was unanimous.
The post-meeting statement noted “uncertainty around the economic outlook has increased further” and as expressed in the previous statement the Committee reiterated it “is attentive to the risks to both sides of its dual mandate”.
Speaking at the press conference, Fed Chair Powell talked up the current state of the US economy reinforcing the Statement message that “economic activity has continued to expand at a solid pace”.
The Chair dismissed concerns over the negative preliminary Q1 GDP last week, noting “Q1 consumer spending and inventories could be revised up”.
Indeed, the statement also noted “although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace…”.
Overall, Powell concluded given the underlying solid nature of the economy, the “costs of waiting are fairly low”.
“If the large increases in tariffs that have been announced are sustained, they’re likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment,” [said] Federal Reserve Chairman Jerome Powell.
The Fed said it would continue to reduce its balance sheet at the reduced pace announced in Mach. The monthly cap on its treasury holdings that can mature without being reinvested was maintained at US$5 billion.
Reaction to the FOMC announcement and Powell’s conference was relatively subdued.
The market was priced for a no change in the funds rate and there was a sense that a more hawkish/wait and see message was likely given it is too soon for the data to reveal the impact from Trump’s trade tariff war. The OIS market pricing around a 25% chance of a -25bps cut at the June meeting, little changed from pre-FOMC release, and a total of -78bp of easing by the end of the year (yesterday it was -81bps).
After the FOMC meeting, the benchmark 10-years US treasury yield traded to an overnight low of 4.25% and now they are at 4.27%.
Movements in the front end of the curve were more subdued with the 2yr rate 3.77%, down -0.5bps over the past 24 hours.
Earlier in the session core European yields closed lower, outperforming UST at the time with both the Bunds and UK Gilts curve bull flattening. Both the 10y Bund and 10y Gilts eased 6bps to 2.48% and 4.46% respectively.
The pre FOMC move lower in core global yields can be partly attributed to tariffs news.
Speaking to the press President Trump said he wasn’t too keen on the idea of pre-emptively lowering tariffs on China to unlock more substantive negotiations with Beijing. This comment followed yesterday’s positive news that Treasury Secretary Scott Bessent and US Trade Representative Jamieson Greer will be meeting with Chinese Vice Premier He Lifeng in Switzerland this week.
EU trade news also dampened the positive vibes.
The EU is planning to present a proposal to the US this week to kick start trade negotiations, the proposal includes lowering trade and non-tariff barriers and boosting investments in the US.
But if negotiations don’t go well, the EU is also preparing to impose additional tariffs on about EUR100 billion in US goods. Bloomberg notes the proposed retaliatory measures will be shared with member states as early as Wednesday and consultations will last for a month before the list is finalized.
Yesterday in China the PBOC announced a -0.5% decrease in the reserve ratio requirement, a -10bps cut to its policy rate to 1.40% and said that it will keep FX, bond and stock markets stable.
PBOC Governor Pan said the latest measures were due to the uncertain outlook for the global economy amid economic fragmentation and trade tensions.
The actions demonstrated a willingness by Chinese policymakers to provide additional support to the economy. But the new round of support was modest in nature.
China’s strategy continues to be one where policy makers are looking to ensure a severe downturn is prevented, but seemingly there remains no appetite to properly stimulate the economy and quickly solve the housing crisis.
Trading partners and the US are looking for China to change its economic model away from supply expansion and towards domestic consumption. These calls will get louder as US tariffs hurt and China looks for other markets to sell its overcapacity. The Hang Seng China Enterprises Index gapped more than 2% higher at the open but gains faded through the session.
Lastly US equities closed higher with Fed Chair’s comments on the solid state of the US economy supporting a small rally towards to the end of the trading session. The S&P500 gained 0.43%, the NASDAQ was up 0.27% and the Dow rose 0.70%. Earlier in the session EU regional indices closed in the red with the Euro Stoxx 600 index down -0.54%.
A Patient Fed, an Impatient Market: Extract from Chris Weston, Pepperstone
The Fed made it clear they will not be taking a pro-active approach to policy, and re-iterated multiple times the well-known view of holding out for clarity on the evolving trends in the hard data.
For now, they see a US economy in a good place, but in a world where the Fed, and the markets, think in scenarios and probability distributions, the Fed holds a base case scenario of slower growth, higher unemployment and inflation skewed for a push back above 3.5%.
Powell was careful not to use the word “stagflation”, but it is essentially what they are thinking and the most probable risk developing in the system but until such time that they see it manifest in the data, then Powell & Co will be paid to do very little.
In effect, Donald Trump is not just the President of the US, but he is the quasi-Chair of the Fed, and to an extent CEO of most of corporate America. His ability to control the narrative and the headlines on trade talks keeps corporate decision makers and many markets participants firmly glued to each and every headline. Until we have a firm consensus on where tariff rates settle, very little is going to be decided on to manage the fallout.
US corporations have expressed their concerns on demand, supply and expected prices paid in the soft data survey’s but are yet to act on these concerns. Firms are not going to lay off workers until they have the ingrained clarity on whether this could prove to truly be a supply or a demand shock.
We may get some guidance when the US retailers report numbers in the next two weeks and how they are anticipating and planning to manage prices. We are in a fairly drawn out process of hard-economic data watching, with weekly jobless claims, nonfarm payrolls, durable goods, JOLTS job openings/layoffs, retail sales all getting increased focus resulting in likely heightened markets sensitivity to the outcome, as they will to the incoming CPI and PPI inflation reports.
Stock news Overnight
In stock news Alphabet shares fell -7.5% and Apple declined -1.1% after a Bloomberg report stated Apple may shift toward using an AI search feature, which would reduce the reach of Alphabet’s Google.
Many other stocks participated in upside moves. Advancers led decliners by a 3-to-2 margin at the NYSE and by an 11-to-10 margin at the Nasdaq.
Later in the afternoon reports also indicated the Trump administration is considering rescinding the AI chip export restrictions.
This news sparked increased buying in the chipmaker space, leading the PHLX Semiconductor Index (SOX) to close 1.7% higher.
US Indices Performance Year-To-Date
-Dow Jones Industrial Average: -3.4%
-S&P 500: -4.3%
-S&P Midcap 400: -6.7%
-Nasdaq Composite: -8.1%
-Russell 2000: -10.8%
Corporate news in Australia
-Macquarie Group ((MQG)) in the ASIC spotlight for compliance failures on electricity market trading.
-Ramsay Health Care ((RHC)) is in discussions to acquire a minority stake in Perth Radiological Clinic.
-Kelsian Group ((KLS)) is looking to divest its tourism assets for lower debt by $675m.
-MedAdvisor ((MDR)) is in discussions around a takeover.
-CEO of Nine Entertainment is positive the CoStar takeover of Domain Holdings ((DHG)) will proceed with with funds of $1.4bn to be allocated to future acquisitions, including Formula One rights.
On the calendar today:
-UK BoE rate decision
-US FOMC rate decision
-ANZ GROUP HOLDINGS LIMITED ((ANZ)) earnings report
-LIGHT & WONDER INC ((LNW)) earnings report
-ORICA LIMITED ((ORI)) earnings report
-VITRAFY LIFE SCIENCES LIMITED ((VFY)) Qtrly report
-WESTPAC BANKING CORPORATION ((WBC)) ex-div 76.000c (100%)
FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 3381.66 | – 57.28 | – 1.67% |
| Silver (oz) | 32.59 | – 0.85 | – 2.54% |
| Copper (lb) | 4.62 | – 0.14 | – 2.99% |
| Aluminium (lb) | 1.08 | – 0.02 | – 1.83% |
| Nickel (lb) | 6.97 | – 0.04 | – 0.55% |
| Zinc (lb) | 1.19 | – 0.01 | – 0.53% |
| West Texas Crude | 58.05 | – 0.92 | – 1.56% |
| Brent Crude | 60.95 | – 1.06 | – 1.71% |
| Iron Ore (t) | 99.33 | + 0.70 | 0.71% |
The Australian share market over the past thirty days
| Index | 07 May 2025 | Week To Date | Month To Date (May) | Quarter To Date (Apr-Jun) | Year To Date (2025) |
|---|---|---|---|---|---|
| S&P ASX 200 (ex-div) | 8178.30 | -0.72% | 0.64% | 4.27% | 0.24% |
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| AMC | Amcor | Upgrade to Add from Hold | Morgans |
| APA | APA Group | Downgrade to Accumulate from Buy | Ord Minnett |
| ARX | Aroa Biosurgery | Speculative Buy from Add | Morgans |
| BDM | Burgundy Diamond Mines | Downgrade to Speculative Hold from Buy | Bell Potter |
| BSL | BlueScope Steel | Downgrade to Neutral from Buy | Citi |
| CTD | Corporate Travel Management | Upgrade to Buy from Neutral | UBS |
| Downgrade to Equal-weight from Overweight | Morgan Stanley | ||
| EDV | Endeavour Group | Downgrade to Neutral from Buy | UBS |
| HLI | Helia Group | Downgrade to Underperform from Neutral | Macquarie |
| ORI | Orica | Upgrade to Buy from Neutral | Citi |
| PTM | Platinum Asset Management | Downgrade to Sell from Hold | Bell Potter |
| SGH | SGH Ltd | Downgrade to Hold from Buy | Bell Potter |
| STX | Strike Energy | Downgrade to Hold from Buy | Ord Minnett |
| WDS | Woodside Energy | Upgrade to Buy from Hold | Ord Minnett |
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.)
(Readers should note that all commentary, observations, names and calculations are provided for informative and educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views expressed are the author’s and not by association FNArena’s – see disclaimer on the website)
All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts on the website and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.
Find out why FNArena subscribers like the service so much: “Your Feedback (Thank You)” – Warning this story contains unashamedly positive feedback on the service provided. www.fnarena.com
FNArena is proud about its track record and past achievements: Ten Years On
Click to view our Glossary of Financial Terms
CHARTS
For more info SHARE ANALYSIS: ANZ - ANZ GROUP HOLDINGS LIMITED
For more info SHARE ANALYSIS: DHG - DOMAIN HOLDINGS AUSTRALIA LIMITED
For more info SHARE ANALYSIS: KLS - KELSIAN GROUP LIMITED
For more info SHARE ANALYSIS: LNW - LIGHT & WONDER INC
For more info SHARE ANALYSIS: MDR - MEDADVISOR LIMITED
For more info SHARE ANALYSIS: MQG - MACQUARIE GROUP LIMITED
For more info SHARE ANALYSIS: ORI - ORICA LIMITED
For more info SHARE ANALYSIS: RHC - RAMSAY HEALTH CARE LIMITED
For more info SHARE ANALYSIS: VFY - VITRAFY LIFE SCIENCES LIMITED
For more info SHARE ANALYSIS: WBC - WESTPAC BANKING CORPORATION