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Live updates: ASX set to fall at open despite Wall Street and global markets closing at record highs, French election causing uncertainty
Good morning and welcome to another week on ABC’s markets and finance blog.
Stephen Letts from the ABC business team gearing up for in-depth coverage of the day’s events, where every post is expected to be a winner but none should be construed as financial advice.
The ASX 200 looks set to open slowly.
ASX SPI futures are trading down 0.1% despite a solid weekend on Wall Street, with the S&P 500 and Nasdaq hitting new highs.
A drop in iron ore prices late in Friday’s session could have a negative effect on the ASX 200’s opening, given the outsized weightings that major miners BHP, Rio Tinto and Fortescue have in the index.
The S&P 500 (+0.5%) and Nasdaq (+1%) were well supported by Microsoft (+1.5%) and Meta (+5.9%), with both also closing at all-time highs.
The macro backdrop also encouraged buying, with weaker jobs numbers raising expectations for a rate cut as early as September.
U.S. job and wage growth slowed marginally in June, while unemployment jumped to 4.1 percent — a two-and-a-half-year high.
With the bet on a September rate cut now priced in at a 73% probability in futures markets, benchmark 10-year Treasuries fell again, down about 20 basis points over the week.
The buying mood was broad-based, with the global MSCI rising 0.3% to a record close, despite European and UK markets losing ground.
The surprise result in the French elections overnight, where the left-wing alliance of the Socialists and Greens looks set to be the largest bloc in parliament, may inject a degree of uncertainty into European markets, but apart from a drop in the euro there has been little action so far.
If the New Popular Front gains control, you can expect two of centrist President Emmanuel Macron’s signature policies — raising the retirement age and abolishing wealth taxes — to be scrapped tout de suite.
While iron ore futures (Dalian) fell on Friday (-3.3%), over the week the price of the main contract gained 3.2%.
Brent crude oil fell 1% on speculation about a ceasefire deal in Gaza and Cyclone Beryl in the Gulf of Mexico could be downgraded to a violent storm upon making landfall and not have much impact on U.S. crude oil production.
Copper hit a three-month high in U.S. markets as a failure to send physical shipments on time sent speculators into a buying frenzy to cover some ill-advised short positions.
There is a sort of arbitrage going on between the Comex exchange and the London Metal Exchange at the moment, which is making some traders richer and some gamblers less rich — fun times.
Gold gained on the weakness of the US dollar, while in the crypto world Bitcoin continued to fall, experiencing its worst week in over a year. Bitcoin fell 3.1% while Ethereum fell 5.1%.