The Australian sharemarket looks set to open slightly lower on Monday, with ASX futures down 7 points, pointing to a possible pause in the recent rally. The S&P/ASX 200 ended last week at a three-month high and now sits just 2.5% below its February peak, but momentum may ease as traders digest global developments.
Overseas, US markets saw after-hours declines on Friday following a surprise move by Moody’s to downgrade the US credit rating from AAA to Aa1. The agency cited ballooning federal debt and rising interest costs, concerns amplified by a new tax bill from President Trump that proposes permanent tax cuts and a US$4 trillion debt ceiling hike. Bond yields spiked, and futures contracts for major US indexes fell.
Despite that late stumble, Wall Street posted a strong week. The S&P 500 climbed 5%, the Nasdaq surged over 6%, and the Dow added 3%, buoyed by easing trade tensions with China and strong tech sector gains. Nvidia rose more than 15%, with Meta and Apple also contributing to the rally.
Rate cut all but locked in as RBA meets
Closer to home, attention shifts to the Reserve Bank of Australia’s interest rate decision on Tuesday. Markets are pricing in a 99% chance of a 25-basis-point cut, which would take the cash rate to 3.85%. Economists expect two more cuts before year-end, though some argue the RBA should remain cautious in the face of persistent inflation.
China data on deck after tariff reprieve
China releases key economic data on Monday, giving investors a chance to gauge the effects of recent US tariff policy shifts. Industrial production is forecast to have slowed to 5.7% in April, down from 7.7% in March, while retail sales are expected to show a modest dip.
Commodities cool as talks temper tensions
Gold dipped toward US$3200 an ounce as Russia and Ukraine resumed direct talks for the first time in years, and iron ore slipped back below US$100 a tonne amid fading short-term demand optimism.
