Australian Shares Set for Modest Increase at Open Amidst a Wave of Market Indicators

Australian shares are anticipated to experience a slight rise this morning, with futures indicating a modest increase following a mixed session on Wall Street. 

Rate Cut Discussion Premature 

RBA Governor Michele Bullock stirred market sentiment with her recent speech, suggesting that discussions about rate cuts are "premature" and hinting at the possibility of further rate hikes to address persistent inflation. Bullock did not comment on recent remarks by the federal treasurer regarding the adverse effects of high interest rates on the economy. 

The Australian Bureau of Statistics (ABS) is set to release its monthly home lending data at 11:30 AM AEST. Forecasts by ANZ predict a 1.3% increase in loan commitments for August, mirroring the rise observed in the previous month. Loan commitments have been on an upward trend since February, following a dip related to higher interest rates, indicating a gradual recovery in both investor and owner-occupier markets. 

US Market Performance 

In overnight trading, the US market showed mixed results. The Nasdaq rose by 0.3%, supported by a 4.9% increase in Tesla’s stock, which announced plans to introduce its full self-driving software in Europe and China, subject to regulatory approval. Conversely, the Dow Jones fell by 0.5%, and the S&P 500 decreased by 0.3%. 

US economic data presented mixed signals, with a weaker-than-expected increase in private payrolls and a decline in weekly unemployment claims. These figures have raised concerns about the health of the US labor market ahead of the critical non-farm payrolls report, which is expected to influence future Federal Reserve interest rate decisions. 

The Commonwealth Bank of Australia (CBA) highlighted the importance of the upcoming report in shaping the Federal Reserve’s September rate cut decision. Economists forecast 165,000 new jobs for August and a decrease in unemployment to 4.2%. Meeting these estimates could support a 25-basis point rate cut, while weaker results might prompt a 50-basis point reduction, potentially impacting the US dollar. 

European Market and Automotive Industry 

European markets also experienced declines, with the FTSEurofirst 300 index down by 0.6%, reflecting concerns about global economic growth. Volvo has revised its commitment to going all-electric by 2030, citing market conditions and customer demands as factors influencing this decision. 

Currencies and Commodities 

The Australian dollar demonstrated resilience, rising from US$0.6713 to a session high of US$0.6740, closing near US$0.6735 despite mixed economic signals from the US. In contrast, the Euro weakened, dropping from US$1.1119 to US$1.1076 before stabilizing at around US$1.1110. The Japanese yen also declined, moving from JPY142.86 to JPY144.20 against the US dollar, before settling at JPY143.40. 

In commodities, oil prices remained relatively stable amid concerns about demand in the US and China, and an expected increase in supply from Libya. Brent crude was down slightly, trading at US$72.69 a barrel, while US Nymex crude prices fell to US$69.15 a barrel. Base metals saw varied performance, with copper futures up 1.4% due to China’s investment in African power networks, while aluminium prices edged down by 1% amid market volatility and global growth concerns. Gold prices remained steady as market participants awaited further US labor market data, which could influence the Federal Reserve’s interest rate decisions.