Daily Market Reports | Jun 02 2025
This story features WASHINGTON H. SOUL PATTINSON AND CO. LIMITED, and other companies. For more info SHARE ANALYSIS: SOL
The company is included in ASX100, ASX200, ASX300 and ALL-ORDS
US markets closed flat on Friday despite more tariff rhetoric from the Administration. May transpired into a strong month for US indices with Australia going along for the ride.
Monday’s ASX200 futures are setting a modestly positive tone, ahead of a raft of economic data this week. The big news this morning involves Washington Soul Patts and Brickworks (see also corporate news).
| World Overnight | |||
| SPI Overnight | 8465.00 | + 8.00 | 0.09% |
| S&P ASX 200 | 8434.70 | + 24.90 | 0.30% |
| S&P500 | 5911.69 | – 0.48 | – 0.01% |
| Nasdaq Comp | 19113.77 | – 62.11 | – 0.32% |
| DJIA | 42270.07 | + 54.34 | 0.13% |
| S&P500 VIX | 18.57 | – 0.61 | – 3.18% |
| US 10-year yield | 4.42 | – 0.01 | – 0.18% |
| USD Index | 99.26 | – 0.02 | – 0.02% |
| FTSE100 | 8772.38 | + 55.93 | 0.64% |
| DAX30 | 23997.48 | + 64.25 | 0.27% |
Good Morning,
Friday closed off a robust positive return for the ASX200, rising 3.8% for May. US indices made even more outsized gains, led by the strongest rally in the Nasdaq since November 2023.
What happened overnight: Extract from Tony Sycamore, IG
US stock markets bounced back on Friday from early losses after President Trump suggested China had violated the trade agreement. The recovery followed Trump’s statement that he plans to speak with President Xi, expressing confidence this would help ease any tensions.
Despite Friday’s wobble, US equity markets closed out the month with impressive gains, led by the Nasdaq, which surged 9.04%, for its best month since November 2023 which came after the Fed’s dovish pivot. The S&P500 rose 6.15%, and the Dow Jones added 1,600 points, or 3.94%.
Economic data on Friday were positive. The Fed’s preferred measure of inflation, the Core PCE price index increased by 0.1% MoM in April allowing the annual rate to ease to 2.5% YoY from 2.7% prior, suggesting inflation was on a downward trajectory prior to the tariff effects.
Personal income rose 0.8% MoM, while Personal spending slowed but continued to rise, up 0.2% MoM, driven by strength in service spending. The final May University of Michigan Consumer Sentiment data saw an upward revision in sentiment, rising to 52.2, with downward revisions to inflation expectations.
Returning to trade and tariffs, last week’s US Court of International Trade decision could reduce the US average effective tariff from around 13.5% to below 6% if implemented. However, the administration still has provisions to achieve its desired outcomes, and the average tariff rate is expected to settle around the 15-18% range given a strong commitment to maintaining a minimum US tariff rate of at least 10% and further sector tariff increases.
Looking ahead, this week sees the release of ISM manufacturing and services PMIs, speeches from Federal Reserve officials, and the JOLTS job openings data, leading up to Friday’s non-farm payrolls release. This report will be closely watched, as recent jobless claims have hinted at a potential downturn in the employment market.
In April, the US economy added 177,000 jobs, beating market expectations of 130,000, while the unemployment rate held steady at 4.2%. For May, the market anticipates an increase of 130,000 jobs and expects the unemployment rate to remain at 4.2% for the third consecutive month.
After rising steadily in the first quarter of 2024, the US unemployment rate has remained between 4.0% and 4.2% for the past 12 months. The US rates market begins the week with an 85% probability of a -25bps rate cut priced in for September and a cumulative -50bps of rate cuts expected by year-end.
The ASX200 finished 73 points (0.88%) higher last week at 8434, locking in a 3.8% gain in May. Last month’s gains were supported by a dovish RBA rate cut and after President Trumps dovish pivots on tariffs.
For the week, the strongest sectors were the Info Tech up 3.85%, Energy rising 2.61%, Financials up 1.44% and Consumer Discretionary lifted 0.88%. In contrast, Utilities fell -0.68%, Materials down -0.21%, Consumer Staples off -0.14% and Telcos -0.06%, were the weakest.
The highlight on this week’s local calendar is Wednesday’s Q1 2025 GDP release. In the last quarter (Q4 2024) Australian GDP increased by 0.6% for an annual rate of 1.3%. It was the Australian economy’s thirteenth consecutive quarter of growth and the highest reading since Q4 2022. Importantly, GDP per capita grew 0.1% QoQ, snapping seven consecutive quarters of falls.
As we await the final partial components of this week’s GDP numbers, the preliminary forecast is for GDP to rise by 0.4% QoQ, as weak consumer spending and investment are offset by growth in public spending and dwelling investment.
Together, these factors should see the annual growth rate rise to 1.5% in Q1, keeping it on track to meet the RBA’s projections of 1.8% for June 2025 and 2.1% for December 2025. The rates market starts the week pricing in a 70% chance of a -25bps rate cut in July and a cumulative -73bps of RBA rate cuts between now and year end.
Event risk to consider in the week ahead: Chris Weston, Pepperstone
The news flow seen through the weekend shouldn’t impact the respective market opens to any great extent, with news that Trump will raise tariffs on steel and aluminium imports to 50%, OPEC-Plus revealed the widely expected 411k barrel output increase in July, and China’s PMIs improving from the April release,
Headlines from an expected meeting/call between Xi and Trump could influence sentiment to an extent. Again, on the fiscal side, the US Senate will crank up its own debate on the “One Big Beautiful Bill”, where passing the act will unlikely be as smooth as passage through the House.
US bond traders know there are just under five weeks until the deadline on 4 July, and with increasing debate about the level of future revenue raised from tariffs, the direction for US 10 & 30-year Treasury yields continues to divide opinions.
US nonfarm payrolls are the marquee risk this week.
By way of the scheduled event risk that could move markets, the central focus in the week ahead turns to the US labour market. The JOLTS job openings report (Tuesday) will be the first labour data point off the rank, with the consensus view that job openings will drop to 7.06m. Digging into the weeds of the report and the layoff rate will be important, notably if we were to see an uptick from the 1% seen in April.
The focus on the US labour market then turns to Friday’s nonfarm payrolls report. The consensus estimate (from analysts) comes in at 125k (estimates range from 190k to 105k), which if 125k were to come in would represent a slowing in hiring, with the 3-month average at 154k and the 6-month average at 193k. Revisions to the prior NFP prints will also matter.
The unemployment rate (derived from the Household survey) is expected to remain at 4.2%, however, after last week’s rise in the continuing jobless claims report, the highest since September 2021, the risk of an upside surprise to 4.3% or above is there.
Staying Stateside, on the survey/growth side, the ISM manufacturing and ISM services releases have the potential to move the dial. However, given the rapidly evolving news flow around tariff rates, the market is perhaps less sensitive to the fickle survey-based (soft) data points – subsequently, we may need to see a big miss/beat in either survey to see a big reaction in markets.
We also get to hear from the usual raft of Fed speakers. The lineup includes speeches from Christopher Waller and chair Powell, although it may be the Fed members set to speak after the NFP print that the market reacts to most intently, especially if we were to see a significantly weaker NFP print.
Away from the US, we navigate the EU CPI, which is released two days before the ECB Meeting on Thursday. A -25bps cut is fully discounted, while the ECB’s terminal rate is priced at 1.55%. This implies two more -25bps cuts and a solid debate on a possible third in this easing cycle.
The Bank of Canada meets on Wednesday and should hold interest rates (IR) at 2.75%, although it wouldn’t surprise if they did pull out a -25bps cut.
In Australia, we get the RBA’s May meeting minutes on Tuesday, followed the day after by Q1 GDP where consensus expectations are for a 0.4% QoQ print, which would take the annualised rate to 1.5% Y0Y (from 1.3% in Q424). With Australia interest rate swaps implying a 71% probability of a -25bps cut at the July RBA meeting, the Q1 GDP print would need to come in above 2% to derail a July cut in the market’s eyes.
In commodity markets, gold closed the week -2%, as did iron ore futures, while Brent crude settled -3.5%.
Corporate news in Australia
-AFR’s Street Talk reports a merger between Washington Soul Patts ((SOL)) and Brickworks ((BKW)) is in the works
-Timing of the Virgin IPO is set to be outlined this week and shares are reported as being priced around -30% to -40% below Qantas’ ((QAN)) valuation.
-HMC Capital ((HMC)) withdraws its closed end fund plans, due to market volatility and investor feedback.
-Co-Star is open to re-hiring Jason Pellegrino as the CEO of Domain Holdings ((DHG)) post takeover.
On the calendar today:
-AU A&NZ May Jod Ads
-AU May Manufacturing PMI
-XX Global PMIs
FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/
| Spot Metals,Minerals & Energy Futures | |||
| Gold (oz) | 3315.40 | – 26.49 | – 0.79% |
| Silver (oz) | 33.18 | – 0.26 | – 0.79% |
| Copper (lb) | 4.70 | + 0.03 | 0.69% |
| Aluminium (lb) | 1.11 | – 0.00 | – 0.16% |
| Nickel (lb) | 6.87 | + 0.02 | 0.30% |
| Zinc (lb) | 1.20 | – 0.02 | – 1.44% |
| West Texas Crude | 60.79 | – 0.13 | – 0.21% |
| Brent Crude | 62.78 | – 0.57 | – 0.90% |
| Iron Ore (t) | 99.12 | – 0.15 | – 0.15% |
The Australian share market over the past thirty days
| Index | 30 May 2025 | Week To Date | Month To Date (May) | Quarter To Date (Apr-Jun) | Year To Date (2025) |
|---|---|---|---|---|---|
| S&P ASX 200 (ex-div) | 8434.70 | 0.88% | 3.80% | 7.54% | 3.38% |
| BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
| ADT | Adriatic Metals | Downgrade to Hold from Add | Morgans |
| AZJ | Aurizon Holdings | Upgrade to Add from Hold | Morgans |
| GMD | Genesis Minerals | Upgrade to Outperform from Neutral | Macquarie |
| GMG | Goodman Group | Outperform | Macquarie |
| Downgrade to Hold from Accumulate | Ord Minnett | ||
| IGO | IGO Ltd | Downgrade to Sell from Neutral | UBS |
| LTR | Liontown Resources | Downgrade to Sell from Neutral | UBS |
| MIN | Mineral Resources | Downgrade to Neutral from Buy | UBS |
| PFP | Propel Funeral Partners | Upgrade to Buy from Accumulate | Ord Minnett |
| PLS | Pilbara Minerals | Downgrade to Sell from Neutral | UBS |
| RRL | Regis Resources | Downgrade to Hold from Add | Morgans |
| S32 | South32 | Downgrade to Neutral from Buy | Citi |
| SOL | WH Soul Pattinson | Downgrade to Hold from Add | Morgans |
| TLC | Lottery Corp | Downgrade to Hold from Add | Morgans |
| TLS | Telstra Group | Upgrade to Outperform from Neutral | Macquarie |
| Downgrade to Accumulate from Buy | Ord Minnett | ||
| Downgrade to Neutral from Buy | UBS | ||
| WEB | Web Travel | Upgrade to Buy from Neutral | Citi |
| Upgrade to Outperform from Neutral | Macquarie | ||
For more detail go to FNArena’s Australian Broker Call Report, which is updated each morning, Mon-Fri.
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CHARTS
For more info SHARE ANALYSIS: BKW - BRICKWORKS LIMITED
For more info SHARE ANALYSIS: DHG - DOMAIN HOLDINGS AUSTRALIA LIMITED
For more info SHARE ANALYSIS: HMC - HMC CAPITAL LIMITED
For more info SHARE ANALYSIS: QAN - QANTAS AIRWAYS LIMITED
For more info SHARE ANALYSIS: SOL - WASHINGTON H. SOUL PATTINSON AND CO. LIMITED