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Highlights
- ASX200 is expected to start the second week of June on a lower note.
- Investors speculate a pause in US Fed’s rate hikes in September.
- Oil prices are strong while the gold prices remain lower.
Australian shares are likely to open a tad lower on Monday, impacted by a fall on Wall Street. This decline was witnessed when a 'remarkably strong' US job report smashed hopes of a softer pace of Federal Reserve interest rate increases. Also, the speculation that the Reserve Bank of Australia will lift its benchmark by a huge accretion, is likely to affect the shares' opening.
The Reserve Bank of Australia (RBA) will be on investors' and traders' radar this week. Markets are looking forward for a 0.4 percentage point rise on Tuesday. This would take up the cash rate to 0.75%.
Meanwhile, the Aussie dollar was quoted at US$0.72.
On Friday, ASX 200 gained approximately 0.9% to close at 7238.80 points.
The US benchmark S&P 500 index witnessed an eighth weekly loss last week, when stocks were impacted on speculation that the Fed would consider a pause in rate hikes in September. The Dow Jones Industrial Average also slided by a percent while the tech-heavy Nasdaq dropped by 2.5%. The fall in the US benchmark indices seem to have weighed on the investor sentiments globally, including the domestic equities.
Today, investors will be seeking the Australia monthly index of inflation for May and the ANZ’s job data. China’s Caixin services PMI for May also might possibly interest Australian investors. Meanwhile, the New Zealand financial markets will remain closed for the Queen’s birthday holiday.
On the Global front
Equities worldwide closed June’s first week on a lower note. They were mostly pulled down by a strong US jobs report and investors getting clarity that the Federal Reserve alongside other central banks might continue monetary tightening.
In Europe, a European Central Bank meeting is expected in this week which will throw light on the overall scene for the first-rate hike of the cycle expected by 21 July.
This week, all eyes are on the Consumer Price Index reports in the US, as inflation remains the biggest concern. The European Central Bank’s meeting is also anticipated amid an expected policy normalisation.
More from ASX- Five ways small businesses can tackle high inflation
On the commodities front:
- Last week in the post-settlement trade, both US crude benchmark WTI and its London peer Brent, hit three-month highs. Also, soon the markets are expected to witness peak annual demand in oil while, refining capacities are likely to remain limited. Supply side concerns are expected to keep oil and petroleum prices on the upside.
- While US Fed’s May jobs report made the oil market shine brighter, it casted a gloomy shade on gold. The potential of Fed continuing its aggressive policies weighed on the yellow metal. Today, spot gold was seen lingering down by about 0.9% early morning.
- Iron ore prices have remained unchanged from last week.
- In alternative investment instruments, the 10-year Australian bond yield is at around 3.48% interest.
Do Read- Will Australia be able to solve gas supply shortage problem anytime soon?
