Australian shares are poised to open lower on Thursday despite a fresh tech-led record on Wall Street, CommSec presenter James Gruber said in his May 14 morning report, with index futures down 0.3 per cent ahead of the open. The ASX 200 closed down 0.5 per cent at 8,630 on Wednesday, dragged lower by the major banks after Commonwealth Bank shed more than 10 per cent on its third-quarter result.
"It seems to be Groundhog Day, because the US markets again rose thanks to tech stocks appearing to ignore higher-than-expected producer prices, which show that inflation is seeping into other areas of the American economy outside of oil," Gruber said. The S&P 500 added 0.6 per cent and the Nasdaq jumped 1.2 per cent, with the semiconductor index rebounding 1.7 per cent — Nvidia up 2.3 per cent and Micron up almost 5 per cent.
The headline geopolitical event was United States President Donald Trump's arrival in Beijing alongside Nvidia chief executive Jensen Huang and Elon Musk for a two-day summit with Chinese counterpart Xi Jinping. "Topics on the agenda include urging Xi to open up to US businesses and maintaining a fragile trade truce, as well as getting China's help to persuade Iran to open the Strait of Hormuz," Gruber said. The composition of the delegation underscores how central US semiconductor access has become to the bilateral relationship.
In parallel, the US Senate confirmed Kevin Walsh as the new Federal Reserve chairman. "Markets will be closely watching what Walsh says in coming days and whether he intends to deliver the interest rate cuts that Donald Trump wants amid rising inflation," Gruber noted. The confirmation comes against a backdrop of a 1.4 per cent month-on-month jump in US producer prices in April — the largest monthly increase in four years, driven largely by crude supply disruption from the Strait of Hormuz closure.
The Commonwealth Bank result was the local headline. CBA's third-quarter print and concerns that the proposed federal-budget curbs on property-investor tax breaks could slow mortgage demand combined to send the stock down more than 10 per cent. The damage spread across the Big Four sector and dragged the broader index lower despite strength elsewhere.
Commodity markets told a different story. Copper futures rose 2.3 per cent to their highest level since late January, while aluminium futures soared more than 5 per cent to four-year highs as supply concerns persisted. Gold settled 0.4 per cent higher at US$4,77 an ounce on rising US inflation concerns. Iron ore was steady at US$111.28 a ton. Brent crude eased 2 per cent to settle at US$105.63 a barrel as investors weighed possible US rate hikes against the Beijing summit. "Today, some of the miners, especially in copper and aluminium, may get a boost given soaring spot prices for the metals, while the rest of the index may lean on whether the financial sector bounces back from yesterday's slump," Gruber said.
US Treasury yields barely moved on the hot PPI print, with the 10-year flat at 4.47 per cent and the 2-year a basis point lower at 3.98 per cent — markets pricing the inflation surge as supply-driven rather than demand-driven. The Australian dollar firmed 0.3 per cent to 72.58 US cents.
In Europe, the FTSEurofirst 300 ended 0.9 per cent higher and the FTSE 100 added 0.6 per cent, led by mining stocks. German drugmaker MC lifted its full-year adjusted operating profit forecast on a 7 per cent share rally, while ABN Amro added almost 8 per cent on a quarterly profit beat. Local watchlist items for Thursday include earnings upgrades from Xero and GrainCorp and the Melbourne Institute's May inflation expectations release. Applied Materials reports US earnings overnight, with US April retail sales also due.