The morning catch up: ASX to start flat despite changing…

Overnight, United States markets extended gains, supported by optimism surrounding trade negotiations, strong corporate earnings, declining bond yields, and easing volatility.

However, the Australian market is poised to open little changed, with limited upside expected from heavyweight financial and materials sectors.

ASX 200 futures were up 2 points (+0.02%) at 8:30 am AEST.

The ASX200 Index rose 149 points, or 1.91%, last week to close at 7,968 points. With three trading sessions remaining in April, the index is up 1.59% for the month, positioned to break a two-month losing streak — a strong recovery following an 8.5% decline earlier in April.

Sentiment improved amid signs of easing United States–China trade tensions and confirmation from President Donald Trump that he does not intend to replace Federal Reserve Chair Jerome Powell. A shift out of high-beta stocks into low-volatility indices such as the ASX200 further supported the gains.

Financials led the sectors with a 2.77% rise, followed by Information Technology (2.09%), Health Care (2.07%), and Real Estate (1.91%). Consumer Staples (0.33%), Telecommunications (0.53%), Utilities (1.15%), and Industrials (1.24%) lagged.

Top-performing stocks included Paladin Energy (+22.20%), Clarity Pharmaceuticals (+20.53%), Deep Yellow (+12.64%), and Appen (+11.25%). The weakest performers were Cettire (-31.43%), Generation Development (-16.40%), and Helios Energy (-12.50%).

Locally, focus this week will be on Wednesday’s March quarter Consumer Price Index (CPI) data. Economists expect a 0.7% quarterly rise, lowering the annual rate to 2.3%. The Reserve Bank of Australia’s preferred measure, the Trimmed Mean, is forecast to rise by 0.6% quarter-on-quarter, with annual inflation easing to 2.8%.

US equities extend gains on tariff optimism and Fed support

In the United States, equity markets posted a fourth consecutive session of gains on Friday, buoyed by signs of progress in trade negotiations and a more dovish Federal Reserve stance. For the week, the Nasdaq rose 6.43%, the Dow Jones Industrial Average added 2.5% (up 971 points), and the S&P 500 gained 4.59%. Despite the rally, the S&P 500 remains 10% below February highs.

President Trump indicated a willingness to lower tariffs on China from 145% to between 50% and 65%, initiating discussions that China tentatively welcomed by reducing some levies, including a 125% tariff on United States semiconductors. The White House also reported progress on trade frameworks with Japan, Korea, and India.

On the economic front, the final University of Michigan Consumer Sentiment reading for April fell to 52.2, marking a fourth consecutive monthly decline amid tariff concerns. Meanwhile, comments from Federal Reserve Governor Christopher Waller suggested the central bank could lower interest rates should the labour market weaken materially.

Looking ahead, investor focus will shift to earnings reports from Amazon, Apple, Microsoft, and Meta, alongside key economic releases including the Core Personal Consumption Expenditures (PCE) Price Index and the April Non-Farm Payrolls report. Markets are currently pricing in 85 basis points of rate cuts by the end of 2025, with the first cut expected as early as July.

European sharemarkets climb to three-week high amid trade optimism

European sharemarkets closed at a three-week high on Friday, recording a second consecutive weekly gain as signs of potential de-escalation in the United States-China trade dispute lifted investor sentiment.

Defence and construction and materials stocks led the gains across sub-sectors, each rising 1.8%. The continent-wide FTSEurofirst 300 index added 0.4% on Friday and advanced 2.8% over the week. In London, the FTSE 100 index edged 0.1% higher, marking its tenth straight session of gains—the longest positive run since 2019—finishing the week 1.7% stronger.

Currencies, commodities and metals

Currencies

Currencies delivered a mixed performance against the US dollar. 

• The Euro strengthened from US$1.1320 to US$1.1386 before settling near US$1.1365 at the close of US trade.
• The Australian dollar eased from A$0.6412 to A$0.6373, hovering around A$0.6395 at the US close. 
• The Japanese yen depreciated from JPY143.24 to JPY144.02 per US dollar, later trading near JPY143.65.

Commodities

Global oil prices rose modestly on Friday but finished the week lower amid concerns over potential oversupply and uncertainty surrounding tariff discussions. 

• Brent crude climbed US32 cents or 0.5% to US$66.87 a barrel.
• US Nymex crude gained US23 cents or 0.4% to US$63.02 a barrel. 
• Across the week, Brent fell 1.6% and US Nymex declined 2.6%.

Metals

Base metal prices retreated as the US dollar strengthened.

• Copper futures slipped 0.3% and aluminium futures declined 1.6% on Friday. However, both metals posted weekly gains, with copper up 2.2% and aluminium 1.9% higher.
• Gold futures fell sharply, shedding US$50.20 or 1.5% to US$3,298.40 an ounce on Friday, pressured by a stronger US dollar and easing trade tensions following reports that Beijing had exempted certain US goods from tariffs. Spot gold was trading near US$3,318 at the US close, down 0.9% over the week.
• Iron ore futures edged US6 cents or 0.1% lower to US$99.92 a tonne on Friday, weighed by persistent uncertainty over US-China relations. Nevertheless, iron ore recorded weekly gains, supported by strengthening near-term demand from China, although the steel-making ingredient slipped 0.1% for the week.

What about small caps?

The S&P/ASX Small Ordinaries (XSO) finished Friday 1.04% higher and was 1.53% up for the week.

We’ll see a lot of quarterlies this week, but in other news you can read about the following and more throughout the day.

1. Lindian Resources Ltd has executed a binding Share Purchase Agreement (SPA) to acquire the remaining 25% interest in Bauxite Holding Ltd, formerly Sarmin Bauxite Limited, from its minority partners in the Lelouma Bauxite Project in the Republic of Guinea. Completion of the SPA will deliver Lindian 100% ownership of the tier-one Lelouma Bauxite Project, considered globally significant.
2. Alkane Resources Ltd and Mandalay Resources Corporation have agreed to combine in a merger of equals, executing a definitive arrangement agreement under which Alkane will acquire all issued and outstanding common shares of Mandalay through a court-approved plan of arrangement. The merged entity will continue under the name Alkane Resources, remain listed on the ASX, and pursue a secondary listing on the Toronto Stock Exchange (TSX).
3. Recce Pharmaceuticals Ltd has entered into a Cooperative Research and Development Agreement (CRADA) with the United States Army Medical Research Institute of Infectious Diseases (USAMRIID), supported by funding from the Defense Threat Reduction Agency. The agreement advances Recce’s development of a new class of synthetic anti-infectives targeting infectious disease threats.