Daily Market Reports | 8:52 AM
This story features MOTORCYCLE HOLDINGS LIMITED, and other companies. For more info SHARE ANALYSIS: MTO
A strong finish to Wall Street on Friday has set the Australian market up for a positive start, post what is looking like an historic win for the Labor Party on the weekend. ASX200 futures are up over one third of a percent.
| World Overnight | |||
| SPI Overnight | 8280.00 | + 32.00 | 0.39% |
| S&P ASX 200 | 8238.00 | + 92.40 | 1.13% |
| S&P500 | 5686.67 | + 82.53 | 1.47% |
| Nasdaq Comp | 17977.73 | + 266.99 | 1.51% |
| DJIA | 41317.43 | + 564.47 | 1.39% |
| S&P500 VIX | 22.68 | – 1.92 | – 7.80% |
| US 10-year yield | 4.32 | + 0.09 | 2.15% |
| USD Index | 99.84 | – 0.14 | – 0.14% |
| FTSE100 | 8596.35 | + 99.55 | 1.17% |
| DAX30 | 23086.65 | + 589.67 | 2.62% |
Good Morning,
A rollback in US recession concerns and expectations for further tariff negotiations underpins an upbeat start to the ASX200. Will sell in May and go away hold true in 2025?
What happened on Friday: US stocks extract from Tony Sycamore, IG
US stock markets gained on Friday to lock in a second consecutive week of gains, fuelled by strong economic data and the potential easing of trade tensions between the US and China.
Over the week, the Nasdaq surged by 3.45%, while the Dow gained 1,207 points or 3%. The S&P500 increased by 2.11% for the week, achieving its longest winning streak of nine consecutive days since 2004.
Friday’s Non-Farm Payrolls report was robust, reflecting continued strength in the labour market.
Headline non-farm payrolls increased by 177,000 in April, compared to the 135,000 expected.
The unemployment rate held steady at 4.2% for its 12th straight month between 4 and 4.2%. The unemployment rate would have dropped to 4.0% if not for the rise in the participation rate from 62.5% to 62.6%.
The resilient labour market data alleviates worries about an economic slowdown for now and bolsters confidence in the Federal Reserve’s ability to remain patient with policy adjustments.
Consequently, the likelihood of a June rate cut from the Fed eased to about 35% from around 55%, with the rates market pricing in a first Fed rate cut in July and a cumulative 78 basis points of cuts by year-end.
What happened in other markets: Extract from NAB Markets Today Research
Eurozone headline CPI remained steady at a 2.2% annual rate in April which compared to consensus expectations for a drop to 2.1%.
Core inflation rose to 2.7%, from 2.4% in March which was also above expectations.
The market is pricing above a 90% chance of a -25bp [cut] at the ECB’s June meeting and was little changed following the release. European bonds close higher in yield but the move only gained momentum after the US data.
The week ahead: Extract from Chris Weston, Pepperstone
We start the new trading week with the oil markets getting increased attention, with the OPEC-plus alliance clearly fractured, and the Saudis pulling the threat of further output increases if there isn’t complete adherence to the set output limits.
Brent crude futures open -4.2% as a result.
Asia equity starts the week on a positive footing, with Aussie markets set to get a positive bump from Labor’s landslide election victory and looking to react to ASX200 bank earnings, with China trade data and Q1 balance of payments in play.
UK markets are closed today for the May bank holiday.
The US recession timeline gets walked back
Friday’s US non-farm payrolls report was strong enough to reduce expectations that Wednesday’s FOMC meeting will be seen as a major volatility event to manage.
With the easing of financial conditions and well-anchored longer-term inflation expectations, the prospect of a neutral stance from the Fed is the base case. In theory, market players won’t learn a great deal of new intel from Powell and Co., who will likely state they are monitoring the situation closely.
The US payrolls report sees positioning and tactical expressions for nearer-term US recession risk unwound, with traders further covering legacy shorts in small caps and high-beta growth equity.
Cognisant that the S&P500 has now closed higher for nine consecutive days (the best run since 2004), the risk that S&P500 futures test the 200-day MA at 5818 and potentially beyond remains in play, especially with over 75% of US-listed equities resuming buybacks later in the week.
S&P500 futures are up 18.1% from the April lows, NAS100 futures in a technical bull market, and strong momentum rallies are occurring in most developed market equity indices.
Funds have reduced volatility hedges, with the VIX index closing at 22.68% and now eyeing a move to the 12-month average at 18.10%.
US earnings to come in heavy this week
US earnings will continue to come in heavy this week, and while we won’t see any with significant weights on the S&P500 or NAS100, we should see some lively one-day moves in the trader favourites, such as Palantir (the implied move on earnings is +/-12.8%), AMD (+/-7.2%), ARM (+/-8.7%), Novo Nordisk (+/-6.2%), and Uber (+/-7.1%).
Looking ahead, Walmart’s earnings (on 15 May) will get huge attention and have the potential to influence market sentiment, and we all know the attention Nvidia will get when they report on 28 May.
With 72% of S&P500 companies having reported, 76% of these names have beaten the consensus EPS expectations, with 48% beating on the sales line. Those that have beaten on EPS have done so by an average of 8.3% this seems impressive, but the level of beats falls in line with historical precedent.
However, with the market going into earnings positioned so bearishly, the bar was low and, as a result, over 60% of reporting names have rallied on the day of reporting.
Australia: Labor’s win, ASX Banks, and Reform potential
In Australia, Labor’s landslide election victory should be taken well by Aussie equity, as will the make-up of the Senate, as the passage to pass its agenda will play out with reduced friction.
Fiscal spending matters for the Australian economy, and markets are comfortable with Jim Chalmers’ approach to spending. The result is set to lift the pressure on the RBA to ease, and over time, the strong mandate offered to Albo from voters should result in the ALP stepping up its reform agenda.
The ASX200 is already fired up and trending strongly higher into this week’s ASX200 bank earnings, with Westpac starting the proceedings today and setting the tone for a sector already on fire.
On first blush, the numbers won’t blow the lights out, with 1H25 NIM at 1.88% and the interim dividend of 76c shy of expectations, while operating expenses are modestly higher than expectations.
Deposits and volumes look solid enough, with credit quality in good shape, and the bank seeing a lower impairment charge, although the bank stated the low in the credit-quality cycle may have passed.
While the banks will need to please an increasingly high bar, it’s hard to fade the rally in the ASX200. Having broken convincingly through the 100- and 200-day MA, I look for 8400 to come into the mix soon enough.
China data watch
On the Chinese economic data front, we look to Friday’s release of the Q1 balance of payments and trade data, with the market keen to see the level of imports from the US and just how severe the cutbacks will prove to be.
China’s bond market is typically my guide on how market players see the prospect for reflation in response to the fiscal measures and monetary easing.
With the 5-year bond at 1.50% and with yields looking to head lower, we can expect new announcements on both trade talks and policy initiatives to occur soon enough.
China will also release its April CPI and PPI on Saturday, and both should show little progress.
Through the week, traders also navigate Canada jobs, central bank meetings in Sweden and Norway, and inflation prints in Switzerland, Mexico, Brazil, Colombia, and Chile.
Market Call: Mission Control, We Have Thrust: Extract Ed Yardeni
We are lowering our subjective odds of a recession to 35% from 45% following last week’s news that China and the US might be moving toward starting trade negotiations.
We also remain impressed with the resilience of the US economy following Friday’s employment report.
However, we are not raising our 6000 year-end target for the S&P500.
Our QuickTakes dated April 24 was titled “Strongest Buy Signal Ever?” We reiterated that “[w]e still believe that the latest correction in the S&P500 bottomed on April 8, a day before Trump basically postponed ‘Liberation Day.'”
A week ago in MARKET CALL, we briefly mentioned that a bullish Zweig Breadth Thrust might be in play.
On Friday, the S&P500 notched its first nine-day winning streak since November 2004.
While the index had many seven-and eight-day streaks in recent years, the nine-day consecutive winning streak had proved elusive for the past two decades until Friday.
The S&P500 now exceeds its close on Liberation Day, just before Trump announced his reciprocal tariffs on the world after the close.
It also exceeds its 50-day moving average and is only -7.4% below its record high. Its -18.9% correction lasted from February 19 to April 8.
Corporate news of Australia
-Hamish Douglas has acquitted 10.45% of MotorCycle Holdings ((MTO)).
-APRA is revisiting Rest super over risk management issues.
-Shell is considering a takeover of BP due to the stock fall and weak earnings.
On the calendar today:
-AU ANZ Job Ads
-AU April PMI
-JP Public Holiday
-CH Public Holiday
-UK Public Holiday
-US April PMI
-ANZ GROUP HOLDINGS LIMITED ((ANZ)) earnings report
-ENDEAVOUR GROUP LIMITED ((EDV)) Qtr Report
-WESTPAC BANKING CORPORATION ((WBC)) earnings report
FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 3257.00 | + 8.95 | 0.28% |
| Silver (oz) | 32.25 | + 0.05 | 0.14% |
| Copper (lb) | 4.70 | + 0.07 | 1.47% |
| Aluminium (lb) | 1.11 | + 0.01 | 1.18% |
| Nickel (lb) | 6.95 | + 0.15 | 2.13% |
| Zinc (lb) | 1.19 | + 0.02 | 1.42% |
| West Texas Crude | 58.29 | – 0.73 | – 1.24% |
| Brent Crude | 61.29 | – 0.59 | – 0.95% |
| Iron Ore (t) | 98.19 | – 1.06 | – 1.07% |
The Australian share market over the past thirty days
| Index | 02 May 2025 | Week To Date | Month To Date (May) | Quarter To Date (Apr-Jun) | Year To Date (2025) |
|---|---|---|---|---|---|
| S&P ASX 200 (ex-div) | 8238.00 | 3.39% | 1.38% | 5.03% | 0.97% |
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| AMC | Amcor | Upgrade to Overweight from Equal-weight | Morgan Stanley |
| BBN | Baby Bunting | Upgrade to Buy from Accumulate | Ord Minnett |
| CPU | Computershare | Downgrade to Sell from Neutral | UBS |
| CRN | Coronado Global Resources | Downgrade to Speculative Hold from Buy | Bell Potter |
| CYL | Catalyst Metals | Downgrade to Hold from Buy | Bell Potter |
| MIN | Mineral Resources | Upgrade to Add from Hold | Morgans |
| MVP | Medical Developments International | Upgrade to Speculative Buy from Hold | Bell Potter |
| NST | Northern Star Resources | Downgrade to Hold from Buy | Bell Potter |
| RMS | Ramelius Resources | Upgrade to Buy from Accumulate | Ord Minnett |
| RRL | Regis Resources | Downgrade to Hold from Buy | Bell Potter |
| Downgrade to Neutral from Outperform | Macquarie | ||
| SFR | Sandfire Resources | Upgrade to Add from Hold | Morgans |
| Downgrade to Neutral from Outperform | Macquarie | ||
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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CHARTS
For more info SHARE ANALYSIS: ANZ - ANZ GROUP HOLDINGS LIMITED
For more info SHARE ANALYSIS: EDV - ENDEAVOUR GROUP LIMITED
For more info SHARE ANALYSIS: MTO - MOTORCYCLE HOLDINGS LIMITED
For more info SHARE ANALYSIS: WBC - WESTPAC BANKING CORPORATION