Daily Market Reports | 8:46 AM
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The ASX200 finished flat last week with notable rotation out of the winning stocks and sectors and into the laggards as Monday draws a close on the financial year and quarter end.
As of Friday’s close, the ASX200 is up 9.61% for the fiscal year, ex dividends.
The futures are pointing to a slightly positive open.
| World Overnight | |||
| SPI Overnight | 8521.00 | + 5.00 | 0.06% |
| S&P ASX 200 | 8514.20 | – 36.60 | – 0.43% |
| S&P500 | 6173.07 | + 32.05 | 0.52% |
| Nasdaq Comp | 20273.46 | + 105.54 | 0.52% |
| DJIA | 43819.27 | + 432.43 | 1.00% |
| S&P500 VIX | 16.32 | – 0.27 | – 1.63% |
| US 10-year yield | 4.28 | + 0.03 | 0.71% |
| USD Index | 97.03 | 0.00 | 0.00% |
| FTSE100 | 8798.91 | + 63.31 | 0.72% |
| DAX30 | 24033.22 | + 383.92 | 1.62% |
Good Morning,
US markets continued to reach for new highs on Friday as the positive tailwinds of a more dovish Feb, a weaker US dollar and the return of retail animal spirits boosted tech stocks and momentum plays.
Chris Weston: A Trader’s Week Ahead Playbook
While not everything went the bull’s way last week, the momentum and trends seen in risky markets portray an almost nirvana environment in which to operate.
The S&P500 recorded its fourth new all-time high for 2025 with the Nasdaq100 also printing new highs and eyeing a push to 23k. Bullish technical breakouts were seen in the Nikkei225 and TAIEX (Taiwan Cap Weighted Stock Index), with strong underlying momentum evident in the DowJones30 and German Dax.
S&P500 20-day realised volatility fell to a year-to-date low of 10.3%, taking the VIX index to 16.3% and the floor for S&P500 30-day implied volatility seen since the start of May. On the week, US high-yield credit spreads tightened 7bps to the best levels since March, copper gained 4.9%, Bitcoin added 7.9%, and the USD (DXY) fell to the weakest levels since March 2022.
Those set in long SPX500 positions will be hoping the July seasonal effects repeat, with the S&P500 seeing positive monthly returns in July for the past 10 consecutive years, with an average monthly gain of 3.4% over this period.
The tailwinds for risk: A surprisingly rapid reduction of the geopolitical risk premium, headlines of at least 10 imminent trade deals, Germany’s fiscal plans and US Treasury Secretary Bessent’s requesting that Congress remove the Section 899 “Revenge Tax” from the ‘One Big Beautiful Bill Act’ (OBBB) all adding tailwinds to risk markets.
A dovish tilt from various Fed officials was also fuel for the bulls, allowing traders to overlook some of the more concerning US data points released through the week, with speeches from Jay Powell, Christopher Waller and Michelle Bowman providing a defined roadmap, and the triggers for a resumed easing cycle.
The US interest rate swaps market responded to the Fed chatter (and to the data flow) and now sees the 30 July FOMC meeting as a ‘live’ affair, placing an 18% chance of a cut here. The bar to cut in July remains a high one and one suspects we’d need to see a shocker of a payrolls print and an unemployment rate at 4.4% (or above), even marrying with a US core CPI (released 15 July) print at or below 0.1% MoM for a cut to truly come into play in July.
A -25bp rate cut at the September FOMC meeting seems far more realistic (the Fed doesn’t meet in August) and the market pricing implies a cut as a slam dunk.
Interest rate traders also added 13bps of implied cuts for the December Fed meeting, to price 2.5x -25bps cuts or -64bps of cumulative cuts through to year-end.
We also saw the US 10-year Treasury yield closing -10bps lower on the week to settle at 4.27%, with the US 10yr real rate settling below 2%. The lower discount rate offering a small, but welcome uplift to the net present value of the high beta and high growth US equity plays.
With inflation front and centre, Friday’s US core PCE inflation print up 2.7% YoY failed to trouble the market, with the 3-month annualised rate now running at just 1.7%. Inflation markets offer tailwinds to risk, with US 2-year inflation swaps -10bps week-on-week to 2.73%, while longer-term inflation expectations (US 5y5y inflation swaps) a gauge closely monitored by the Fed closed little changed on the week to settle at 2.48%.
An interesting factor to consider is the higher tariff regime has resulted in the US Customs Department recording a revenue boost of over 150% since February. Despite this recent uplift in excise collections, there has been no uplift in US goods or services inflation.
Fed chair Powell expects goods inflation to become increasingly evident in the June, July and August inflation data releases, and as such implied volatility will be marked up for US CPI dates.
Event risk to navigate in the week ahead: This week’s US economic data releases come in on the heavy side, with ISM manufacturing & services, JOLTS job openings, weekly jobless claims and nonfarm payrolls (NFP) set to impact.
The NFP report is the marquee risk event with the market looking for payrolls to come in at 113k and the unemployment rate to rise a tick to 4.3%. The risk to rates pricing and the USD seems asymmetric given the Fed’s reaction function is biased towards the timing of the next cut. Subsequently, the USD is likely to have a more significant sell-off on a poor NFP/higher unemployment print than a rally on a hotter payrolls outcome.
Equity rallying on reduced participation: With just 15 days until the start of the US 2Q 2025 earnings season, resilient S&P500 earnings estimates add its own contribution to the recent equity appreciation, with analysts collectively revising up their 12-month forward EPS assumptions by 1.2% over the past 4 weeks.
The investor flows are skewed towards tech, consumer discretionary and communications services. With the S&P500 printing its fourth at the high of 2025, the concentrated leadership and reduced market breadth does feel a bit like 4Q 2024, where the S&P500 was driven higher by a handful of mega-cap momentum plays.
Fading the rally on breadth concerns alone was a poor trade into 2024, and like shorting risk on valuation concerns, it will likely be so again through this bull run. Notably, Nvidia added US$340bn in market cap last week, with CEO Jensen Huang giving an update and outlook at its annual shareholder meeting that clearly hit a home run with investors.
Nvidia is a business the street is falling in love with once again, and while many still have the scares from January with DeepSeek releasing its R1 model, traders are running core longs in Nvidia equity, but hedging against a tail risk buying puts, and diversifying into other areas of tech.
USD flows – Can we see an 8th consecutive lower close? The USD finds few friends in this market with the DXY closing lower for 7 consecutive days. It will therefore not surprise EURUSD has closed higher for 7 straight days, a run of form seen only 23 other times since 2000. The reaction function of the USD seems clear cut this week, with bad news on the US data front taking the USD lower on a broad basis, while better-than-expected data will likely see traders sell USD rallies.
A ‘shadow’ Fed chair is a USD negative: Trump’s threats of nominating a new Fed chair as early as October are a clear USD negative and will limit the USD upside stemming from better data or the potential passing of the OBBB act this week.
Whether Trump does choose to put in a “shadow” Fed chair and risk undermining Jay Powell in his final months as Chair is unclear. Perhaps, if the Fed sufficiently guides to a cut in September in the July meeting, Trump will TACO and hold off making the early nomination, or maybe the markets will force the call on him.
Of course, the chair is but one vote and the incoming Fed would still need to guide policy to the realities of the unfolding economics, but no foreign investor would want to hold a lumpy USD exposure if the Fed chair was truly seen as executing Trump’s obvious agenda, and these institutions would become insensitive to USD hedging costs.
We also consider the other side of the USD equation and key data ex-US EU CPI, China PMIs, and the ECB’s Sintra Forum offering keynote speeches from BoE Gov Bailey, BoJ Gov Ueda and ECB President Lagarde.
Corporate news in Australia
-ASIC is looking into voter error on the rejected PointsBet ((PBH)) takeover.
-Alinta is looking at a merger with Energy Australia, a $10bn deal.
-Sale of Healthscope has been delayed until July-September.
On the calendar today:
-NZ June ANZ Business confidence
-AU May private sector credit
-JP May Industrial Prod’n
-CH June PMI
-US Dallas Fed mfg
-ABACUS GROUP ((ABG)) ex-div 4.25c
-ABACUS STORAGE KING ((ASK)) ex-div 3.10c
FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/
Apologies for the table below. Technology is to blame. Underneath the table follows commodity markets commentary from ANZ Bank this morning.
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 3302.30 | 0.00 | 0.00% |
| Silver (oz) | 36.20 | 0.00 | 0.00% |
| Copper (lb) | 5.10 | 0.00 | 0.00% |
| Aluminium (lb) | 1.18 | 0.00 | 0.00% |
| Nickel (lb) | 6.82 | 0.00 | 0.00% |
| Zinc (lb) | 1.26 | 0.00 | 0.00% |
| West Texas Crude | 65.52 | 0.00 | 0.00% |
| Brent Crude | 66.80 | 0.00 | 0.00% |
| Iron Ore (t) | 94.49 | 0.00 | 0.00% |
Commodities by ANZ Bank:
Crude oil prices were steady on Friday as the market weighs geopolitical risks against reports of potential OPEC production increases. Comments from President Trump following the Middle East ceasefire that there could be sanctions relief for Iran should it give up its nuclear program had weighed on prices earlier in the week.
However, US Energy Secretary Chris Wright said they will remain in place for now. Trump is also said to have dropped plans to ease any sanctions, signalling that his commitment to the “maximum pressure” campaign aimed at curbing Iran’s oil exports remains in place. As geopolitical uncertainty lingers, market focus has turned to supply-demand fundamentals.
Bloomberg reported several OPEC-Plus delegates have said that their countries are ready to consider another 411kb/d increase for August when they convene on 6 July.
That is same increase the group approved for the three previous months. Russia signalled its willingness to boost production if the group deems it necessary. Crude oil still ended the week down more than -13% after the ceasefire between Iran and Israel was reached, easing concerns of disruptions to supply from a region that produces more than a third of the world’s crude.
European gas prices recorded their biggest weekly decline in almost two years amid the easing tensions in the Middle East. The escalation of the conflict between Israel and Iran raised concerns that Qatar supplies of LNG through the Strait of Hormuz would be disrupted.
Qatar accounts for more than 10% of Europe’s LNG imports, while over 20% of global trade traverses the waterway. Europe has become more heavily reliant on the LNG market due to Russia’s curtailing gas supplies.
Imports of LNG have been strong, 41% higher than five-year seasonal average as it looks to refill depleted storage facilities. North Asia LNG prices also fell sharply last week amid weak demand from major buyers. China’s 30-day average gas imports were 174kt/d, -6% lower than five-years seasonal average, according to data compiled by Bloomberg.
Easing geopolitical tensions triggered a risk-on tone across markets late in the week. This weighed on safe haven buying of risk assets such as gold, with the precious metal ending the week down -2.8%.
Positive economic data also eased concerns about the outlook for the world economy. US consumer sentiment rose sharply in June to a four-month high and inflation expectations improved notably. However, the US Federal Reserve remains mindful of the potential impact of tariffs on inflation.
Platinum surged to its highest level since 2014 amid supply concerns. The spot market in London and Zurich have shown signs of tightness for months, driven by more than half a million ounces flowing into US warehouses.
Copper led the base metals higher amid signs of progress in global trade talks. Trade negotiators from Japan and India extended their stay in Washington as negotiations progressed well. This comes ahead of Trump’s 9 July deadline.
Nevertheless, uncertainty remains high. China reiterated its opposition to any trade deals countries make with the US that harm its own interests.
The ongoing squeeze on the LME also provided some support to prices. Spot copper contracts continue to trade at huge premiums to later-dated futures. Supplies in LME warehouses have been partly drained due to record shipments to the US ahead of upcoming tariffs.
The Australian share market over the past thirty days
| Index | 27 Jun 2025 | Week To Date | Month To Date (Jun) | Quarter To Date (Apr-Jun) | Year To Date (2025) |
|---|---|---|---|---|---|
| S&P ASX 200 (ex-div) | 8514.20 | 0.10% | 0.94% | 8.55% | 4.35% |
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| ADH | Adairs | Downgrade to Hold from Buy | Bell Potter |
| AMC | Amcor | Upgrade to Buy from Neutral | UBS |
| AV1 | Adveritas | Upgrade to Buy from Speculative Buy | Bell Potter |
| AZJ | Aurizon Holdings | Upgrade to Outperform from Neutral | Macquarie |
| Downgrade to Hold from Accumulate | Morgans | ||
| DRO | DroneShield | Downgrade to Hold from Buy | Shaw and Partners |
| REH | Reece | Upgrade to Accumulate 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.)
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