Outlook for the day: Aussie futures imply a cautiously positive start to a new week and month, however weekend China manufacturing and OPEC+ oil news may bend the market's trajectory.
ASX futures: up 8 points or 0.09%
Friday/weekend themes:
US stocks closed mixed but little changed on Friday as trade tariff confusion overshadowed a choppy session.
The S&P 500 mostly overcame a mid-session dip to finish the day near flat. The Dow edged up 0.13% as more component companies rose than fell. The Nasdaq Composite eased 0.32% as Tesla, Nvidia and AMD declined.
The market hit a session low after Treasury Secretary Scott Bessent admitted trade talks with China were "a bit stalled" and President Donald Trump used social media to accuse Beijing of violating their trade agreement. Stocks reversed most of their losses after Trump adopted a more positive tone, saying he would speak to President Xi Jinping and hoped to work out their differences.
Friday's events ended a challenging week of ever-shifting tariff news for investors. The US Court of International Trade halted most of the White House's tariffs on Wednesday night (US time) before a court of appeal paused that decision a day later, bringing the duties back into force until another court rules on the issue.
"The news cycle is maddening," Jake Dollarhide, CEO of Longbow Asset Management, told Reuters. Investors "don't know how to react to tariff" news.
“It’s an awkward time,” Jay Hatfield, CEO of Infrastructure Capital Management, told CNBC. “If you’re an investor, you want to bet on good earnings, not good tweets about tariffs.”
Sector moves imply a defensive bias to the session. While most sectors advanced, the only sectors to advance more than 1% were consumer staples +1.16% and utilities +1.08%. Financials gained 0.2%. Basic materials firmed 0.12%. The drags were energy -0.68%, consumer discretionary -0.58% and tech -0.43%.
May was a strong month for Wall Street as the S&P 500 rebounded 6.2%, its best monthly return since November 2023. The Nasdaq Composite gained 9.6%. The Dow put on 3.9%.
Iron ore sealed a losing week with another dip on Friday after Chinese hot metal output shrank for a third week as the year moved deeper into a period of seasonal weakness. Benchmark ore on the Dalian Commodity Exchange ended daytime trade 0.43% lower at US$97.65 a metric ton. That sealed a weekly loss of 2.84%. The Singapore ore benchmark declined 0.66% to US$96.25 for a weekly loss of 1.91%.
Friday's ore market weakness preceded weekend news that Chinese factory activity contracted in May for a second month. The official manufacturing purchasing managers' index improved to 49.5 from 49 in April but remained below the 50-point level that separates growth from contraction. The result was broadly in line with expectations.
A rebound in the US dollar and the court-ordered reinstatement of US tariffs weighed on metal prices. US gold futures settled US$28.50 or 0.9% lower at US$3,315.40 an ounce as demand for havens temporarily abated. Spot gold declined US$29.69 or 0.89% to US$3,288.58. "Gold is under slight pressure as we're seeing a little lesser need for safe-haven but it does look like there is going to be significant push back from Trump [against legal attempts to curb tariffs] and that will eventually help prices," David Meger, director of metals trading at High Ridge Futures, told Reuters.
Copper ended a positive month under pressure from a rising greenback. Benchmark copper on the London Metal Exchange (LME) declined 0.73% to US$9,498 a metric ton on Friday. The retreat dragged the metal's gain for the month backs towards 4%. Prices were supported all month by falling warehouse stocks as US buyers raced to beat a possible tariff on copper imports. "LME copper is facing a bit of a squeeze as [US futures exchange] Comex stocks continue to rise and LME stocks are falling," Dan Smith, managing director of Commodity Market Analytics, told Reuters.
Oil faces possible selling pressure after the OPEC+ group of major producers (Organization of the Petroleum Exporting Countries and allies) agreed on Saturday to increase production for a third month. The cartel agreed to raise output by 410,000 barrels a day next month, restoring output that was originally reduced earlier this year to prop up prices. The latest moves are reportedly intended to win back market share from US shale producers, which are only profitable when prices reach a certain level, while also satisfying US President Donald Trump's call for lower prices. On Friday, Brent crude eased 25 US cents or 0.39% to US$63.90 a barrel.
“The cartel, once laser-focused on price defense, has veered into volume-first territory, weaponizing barrels to discipline quota cheats, squeeze U.S. shale, and curry favor with Washington, all while dancing on the edge of its own fiscal cliff. If Riyadh’s playing the long game, they’re betting the price dip today is the cost of cartel control tomorrow” - Stephen Innes, managing partner at SPI Asset Management (per MarketWatch).
Key events this week:
May job ads - 11.30 am AEST
US manufacturing PMI - tonight
Conference address by US Federal Reserve Chair Powell - tonight
Minutes from the May RBA policy meeting - Tuesday
Q3 company operating profits - Tuesday
China manufacturing PMI - Tuesday
US job openings - Tuesday
Q3 GDP - Wednesday
US private payrolls - Wednesday
US services PMI - Wednesday
Trade balance - Thursday
US May employment report - Friday
S&P 500: down 0.5 points or 0.01%
Dow: up 54 points or 0.13%
Nasdaq: down 62 points or 0.32%
VIX: down 3.18% to 18.57
US 10-year treasury yield: 4.403%
Dollar: up 0.05% to 64.34 US cents
Iron ore (Dalian): down 0.43% to US$97.65
Brent crude: down 25 US cents or 0.39% to US$63.90
Gold (futures): down US$28.50 or 0.9% to US$3,315.40
Gold (spot): down US$29.69 or 0.89% to US$3,288.58
Silver (spot): down 34 US cents or 1.03% to US$32.98
Palladium (spot): down 50 US cents or 0.05% to US$964
Antimony (China ore): down 1.95% to US$11,779
NYSE Arca Gold Bugs: up 0.43%
Bitcoin: up 0.25% to US$105,047
Copper (LME): down 0.73% to US$9,498
Nickel (LME): down 0.9% to US$15,237
Lithium carbonate (China spot battery grade): down 0.16% to 7,454 yuan
Global X Lithium & Battery Tech ETF: down 2.35%
Uranium (spot): steady at US$72
Global X Uranium ETF(URA): down 0.77%
BHP: down 0.57% (US); down 0.79% (UK)
