Daily Market Reports | 8:37 AM
This story features BHP GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: BHP
US markets flat lined on Friday ahead of the weekend’s China/US trade negotiations in Geneva. Some positive signals from the US Administration and an upcoming day of talks has US futures strongly higher. ASX200 futures are also pointing to a positive start.
|
World Overnight |
|||
| SPI Overnight | 8265.00 | + 16.00 | 0.19% |
| S&P ASX 200 | 8231.20 | + 39.50 | 0.48% |
| S&P500 | 5659.91 | – 4.03 | – 0.07% |
| Nasdaq Comp | 17928.92 | + 0.78 | 0.00% |
| DJIA | 41249.38 | – 119.07 | – 0.29% |
| S&P500 VIX | 21.90 | – 0.58 | – 2.58% |
| US 10-year yield | 4.38 | + 0.00 | 0.05% |
| USD Index | 100.17 | – 0.31 | – 0.31% |
| FTSE100 | 8554.80 | + 23.19 | 0.27% |
| DAX30 | 23499.32 | + 146.63 | 0.63% |
Good Morning,
After a sanguine Friday on markets, this week is setting up to be big, between ongoing trade negotiations with US/China and important economic data prints in the US and Australia. Out of season, local earnings reports will also be in focus.
What happened on Friday: Extract from Tony Sycamore, IG
US equity markets concluded last week on a subdued note as uncertainty loomed ahead of the weekend’s US-China trade discussions.
For the week, the S&P500 finished -0.5% lower, the Nasdaq slipped about -0.2%, and the Dow dropped by -0.2%.
Anticipation ahead of the US-China talks was dampened by President Trump’s comment on Friday night that an 80% tariff on Chinese imports “seems right.”
Although lower than the existing 145% on many Chinese imports, such a rate would still result in a 15-20% effective tariff rate on all US imports, posing a significant threat to US growth prospects.
Following the first day of talks in Switzerland, President Trump shared on social media negotiators had achieved a “total reset” and “great progress” had been made, indirectly referring to mending the damage inflicted by the White House’s heavy-handed approach to tariffs and trade policy.
The baseline outcome from this weekend’s talks is somewhere in the vicinity of an agreement to meet for follow-up talks and an expectation that tariffs will be rolled back gradually.
This sort of outcome or better, in conjunction with India and Pakistan agreeing to a ceasefire plus news that Russian President Putin has proposed direct talks with Ukraine, should provide a modest boost to markets at the start of this week and provide some relief to businesses facing disrupted supply chains.
In the stock space, about 87% of S&P 500 companies have now reported results, with 73% exceeding first-quarter earnings estimates by an average of 8%, while 57% beat revenue estimates by an average of 0.8%.
This week, companies including Cisco, Tencent, Alibaba, Walmart, and Target are set to report.
Elsewhere, attention will focus on CPI, PPI, Retail Sales and Consumer Sentiment data, and speeches from Federal Reserve officials, including Fed Chair Powell.
The rates market begins this week, pricing a 70% chance of a -25bp Fed rate cut in July, with a cumulative -69bp of rate cuts priced between now and year-end.
Pacts, Progress and the Momentum Trade: Chris Weston, Pepperstone
The handover of risk into the new trading week is positive, and US equity futures will start the week reacting to the US-China weekend meeting on a solid footing.
As such, I remain skewed for higher levels through the week ahead in developed market equity indices. Momentum is the tactical strategy to play, and, at least for now, I take the stance of buying into strength in the US500, NKY225, NAS100, AUS200, GER40, or HK50, for a continuation of the bull trend in place from the April lows.
This same constructive outlook is also true of Bitcoin, where we see the price taken to US$105k on Sunday before increased supply kicked in; a further squeeze higher in the S&P500 or NAS100 futures through Asia could see price push towards the at-the-highs of US$109k soon enough.
Despite the fundamentals hardly screaming out for long positions, Brent crude rallied 4% last week, and I take the view that a daily close above US$65.22 could see a further push into US$68 and the top of the recent range.
Gold may face some downside pressure early through Asia, with eyes on Friday’s low of US$3274.
Assessing The Key Event Risks for the Week Ahead
Headlines on tariffs will remain a constant input that drives market sentiment, with the initial reaction to the weekend US-China talks predictably encouraging.
Both the China and US camps remarked that substantial progress was made, achieving a consensus and establishing a consultation mechanism for trade and economic issues.
While this was always the likely outcome, it does represent an important step forward in the dialogue process and is obviously constructive, and we now look for the necessary substance and whether the two countries will take the tangible step towards the speculated US import tariff rates of 60% (from 145%).
We can be assured of further dialogue between the two camps, and headline risk/noise, but markets will have a low tolerance for inaction.
Market players want the tariff rates taken down to 60% swiftly and in one action (over a staggered approach).
Let’s see, because the lower Bessent goes on China tariffs, the lower the scope for removing income taxes on a broad array of US taxpayers.
On the equity side, US earnings will dissipate in frequency, although Walmart’s Q126 Earnings (released pre-market on Thursday) will be well-watched, and have the potential to move the dial.
With macro markets now comfortable with the idea that we’re all watching the incoming US hard economic data, and that data will take time to crack, if at all.
However, if we’re going to listen to any of the US corporates on the tariff impact, it’s the US retailers. Walmart is a bellwether in this regard, although, as we heard on its investor day (on 9 April), around two-thirds of its products are assembled and produced in the US, which cushions the effects of tariffs.
The market will still be sensitive to Walmart’s outlook and guidance and how it’s managing tariffs, and as such, we see the implied move (from options pricing) for the day of earnings set at plus or minus 5.3%, a premium to the 4.8% average move recorded in the past 8 quarterly earnings reports.
Can Nvidia Run Hot Despite the AI Diffusion Ruling?
We also hear the conclusion to the AI Diffusion ruling (due on Thursday).
The recent speculation is that Trump will scrap Biden’s chip export rules and look to replace them with a new ruling on chip controls.
Investors expect the new controls to be simplified, and no more onerous than the Biden-era controls. Whether the Diffusion Day findings impact Nvidia, and the US AI plays, is a factor to watch, but the real test for the AI-giant falls on its Q126 earnings report on 28 May.
For first time in recent memory there is real debate if they’ll miss the consensus expectations on revenue for $43.22b, a 9.9% increase from Q425.
Nvidia has rallied a lazy 34% from the April lows, but the real kicker awaits on the 28 April. If they can beat and raise, we could feasibly be looking at this former market darling showing full leadership once again.
Many in the investment world have this name on their buy list, but are holding off until they clear the earnings hurdle, subsequently reacting with increased conviction should this major overhang be removed.
If Nvidia can kick this week into and above $125, then NAS100 futures should break above the 200- and 100-day moving average, and the 26 March swing high of 20,045.
Traders Set to Navigate US CPI and Retail Sales
On the US economic data risk, US CPI, PPI and retail sales could move markets and pose risk to positioning.
US core CPI is seen as the marquee event risk, although it feels too early to expect the anticipated tariff price lift to play into this CPI release, with the US forward inflation swaps market pricing the price lift from July and building towards 3.60% by November.
That said, with markets concerned about a future stagflation state, there could still be a high sensitivity to inflation and retail sales data.
Simplistically, a US core CPI print that shows progress in April, with the year-on-year clip coming in below 2.7% should reinvigorate the prospect for a cut at the July FOMC meeting, an outcome implied at 68%.
Should the US core CPI come in above 3% y/y, and the USD should find solid buyers, with equity unlikely to take to that kindly.
Again, the US retail sales print could also impact. Those positioned long of US equity would want to see both a weaker CPI print and a hotter retail sales release.
USD longs would be looking for hotter numbers in both data points, albeit not so hot on the inflation outcome that it promotes a sharp pick up in volatility, which could see the USD rollover vs the CHF and JPY.
There is also a strong line-up of Fed speakers, but I’d say it’s still too early for them to offer anything new that we haven’t recently heard.
Key Event Risk Outside of the US
The UK data flow will get a strong focus from GBP traders, with the wages/employment report and Q1 GDP due through the week, although the numbers would need to be sufficiently weak to bring a June cut (from the MPC) onto the table.
In Australia, we get consumer and business confidence, Q1 wages and the April employment report.
A -25bp cut in the May RBA meeting is seen as a done deal, but the data could see rates/swaps trader’s massage expectations for policy action in the July RBA meeting, where there is a 56% implied chance of a -25bp cut here.
Further out and after the May cut, traders see three more -25bp cuts by December.
Corporate news in Australia
-BHP Group’s ((BHP)) Argentinian copper exposure via a 50% stake of Filo del Col and Josemaria projects in the Andes could contain more than five times the metal than originally estimated.
-Dyno Nobel ((DNL)) is reported as signing a deal with Ridley Corp ((RIC)) for the sale of part of its fertiliser business.
-Nine Entertainment ((NEC)) with its streaming service will broadcast men’s and women’s World Cup tournaments in Australia under long-term deals.
-HMC Capital ((HMC)) has sold around $1.6bn of its debt in Healthscope
On the calendar today:
-JP March BoP
-JP March Trade Bal
-DYNO NOBEL LIMITED ((DNL)) earnings report
-NATIONAL AUSTRALIA BANK LIMITED ((NAB)) ex-div 85.00c (100%)
FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 3344.00 | + 33.06 | 1.00% |
| Silver (oz) | 32.91 | + 0.29 | 0.90% |
| Copper (lb) | 4.65 | + 0.06 | 1.27% |
| Aluminium (lb) | 1.10 | + 0.01 | 0.51% |
| Nickel (lb) | 7.01 | + 0.04 | 0.55% |
| Zinc (lb) | 1.21 | + 0.01 | 1.06% |
| West Texas Crude | 61.02 | + 0.78 | 1.29% |
| Brent Crude | 63.91 | + 0.71 | 1.12% |
| Iron Ore (t) | 98.55 | + 0.32 | 0.33% |
The Australian share market over the past thirty days
| Index | 09 May 2025 | Week To Date | Month To Date (May) | Quarter To Date (Apr-Jun) | Year To Date (2025) |
|---|---|---|---|---|---|
| S&P ASX 200 (ex-div) | 8231.20 | -0.08% | 1.29% | 4.94% | 0.88% |
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| APA | APA Group | Downgrade to Accumulate from Buy | Ord Minnett |
| BSL | BlueScope Steel | Downgrade to Neutral from Buy | Citi |
| NST | Northern Star Resources | Upgrade to Buy from Neutral | Citi |
| ORI | Orica | Upgrade to Buy from Neutral | Citi |
| PTM | Platinum Asset Management | Downgrade to Sell from Hold | Bell Potter |
| SIQ | Smartgroup Corp | Downgrade to Hold from Buy | Bell Potter |
| STX | Strike Energy | Downgrade to Hold from Buy | Ord Minnett |
| TNE | TechnologyOne | Downgrade to Hold from Buy | Bell Potter |
| 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: BHP - BHP GROUP LIMITED
For more info SHARE ANALYSIS: DNL - DYNO NOBEL LIMITED
For more info SHARE ANALYSIS: HMC - HMC CAPITAL LIMITED
For more info SHARE ANALYSIS: NAB - NATIONAL AUSTRALIA BANK LIMITED
For more info SHARE ANALYSIS: NEC - NINE ENTERTAINMENT CO. HOLDINGS LIMITED
For more info SHARE ANALYSIS: RIC - RIDLEY CORPORATION LIMITED