The Australian share market is expected to open higher this morning, with ASX 200 futures up 73 points or 0.87%. Markets globally are showing resilience, brushing off concerns about the US credit rating downgrade, as investors eye key central bank moves and earnings releases.
In a nutshell:
- Wall Street ends higher despite early jitters from Moody’s US credit rating downgrade
- RBA expected to cut rates by 25 basis points at 2:30 pm AEST, taking the cash rate to 3.85%
- Fed officials hint at delayed rate cuts, as economic uncertainties linger
| Index | Value | Change |
|---|---|---|
| S&P 500 | 5,964 | +0.09% |
| Dow Jones | 42,792 | +0.32% |
| Nasdaq | 19,215 | +0.02% |
| Russell 2000 | 2,104 | -0.42% |
Overnight Summary
US markets rebounded strongly after an early selloff triggered by Moody’s downgrade of the US credit rating. The S&P 500 clawed back losses to close slightly higher (+0.09%) for its sixth straight gain, now up 23% from its April low.
The Dow Jones rose 0.32% and the NASDAQ edged up 0.02%, while the Russell 2000 lagged, down 0.42%. Most major sectors finished in the green, led by Health Care (+0.96%) and Consumer Staples (+0.42%), while Energy (-1.55%) underperformed.
Key Global Moves:
- US 10-Year Treasury Yield: Up 0.77% to 4.475%
- Gold: +0.11% to US$3,233.50
- Oil (WTI): +0.32% to US$62.69
- Bitcoin: +1.20% to US$105,423
- VIX (Volatility Index): +5.22% to 18.14
- AUD/USD: Rallies 0.87% to 0.6457
Credit Downgrade – Market Reaction Muted
Despite the downgrade of the US credit rating to AA+ by Moody’s — following similar moves by S&P (2011) and Fitch (2023) — markets took the news in stride. Equities stabilized, bond yields rose modestly, and gold gave back early gains.
Goldman Sachs noted that US equities saw the largest net buying since December 2021, driven mainly by short covering. Meanwhile, Bank of America says the downgrade isn’t expected to trigger forced selling but could worsen Treasury sentiment amid growing fiscal deficit concerns (estimated to hit 7% of GDP by FY26-27).
Central Banks in Focus
Markets are watching the Reserve Bank of Australia (RBA) closely today, with a widely expected 25 bps rate cut set to bring the cash rate down to 3.85%. The decision is due at 2:30 pm AEST.
In the US, Fed officials are signaling patience. NY Fed’s John Williams said clarity on the economic outlook may not come until July, while Atlanta Fed’s Raphael Bostic sees just one rate cut in 2025, likely in the September–December window.
Global Markets Snapshot
| Index | Value | Change |
|---|---|---|
| S&P 500 | 5,964 | +0.09% |
| Dow Jones | 42,792 | +0.32% |
| NASDAQ | 19,215 | +0.02% |
| Canada | 25,972 | +0.29% |
| Germany | 23,935 | +0.70% |
| UK | 8,699 | +0.17% |
| Japan | 37,499 | -0.68% |
| India | 82,059 | -0.33% |
| Hong Kong | 23,333 | -0.05% |
Stocks & Sector Watch
Notable Announcements:
- Microsoft to integrate Elon Musk’s Grok AI into its cloud offering
- Regeneron to acquire bankrupt 23andMe for $256 million
- Xiaomi unveils plans for 3nm chips, pledging $7B over 10 years for chip development
- Nvidia to ramp up investments in Taiwan
US Sectors (Top Performers):
- Health Care +0.96%
- Consumer Staples +0.42%
- Industrials +0.38%
Laggards:
- Energy -1.55%
- Consumer Discretionary -0.27%
- Info Tech -0.05%
ASX Today
The local market is poised to bounce after global markets shook off credit rating worries.
Key Corporate News:
- Atlas Arteria: IFM’s stake increases to 32.58% from 29.88%
- Rio Tinto: Partners with Chile’s Codelco on lithium, investing $350m
- Technology One (TNE): Set to report H1 earnings today – Goldman expects ARR growth of 19% to $504m, revenue up 14% to $278m, and PBT up 24% to $76m
Broker Moves
- Fisher & Paykel: Downgraded to Neutral (from Buy); target raised to NZ$39 (UBS)
- Paragon Care: Upgraded to Buy (from Hold); target remains $0.52 (BP)
Economic Calendar (AEST)
- 2:30 pm – RBA Interest Rate Decision (expected 25 bps cut)
- 10:30 pm – Canada Inflation Data (April)
Dividend Watch
Trading Ex-Dividend:
- Tue 20 May: Sandon Capital Investments (SNC) – $0.014
- Wed 21 May: Amcor (AMC) – $0.20
- Thu 22 May: Aristocrat Leisure (ALL) – $0.44, Orica (ORI) – $0.25
Dividends Paid: Saferoads (SRH)
Earnings Reports: James Hardie (JHX), Technology One (TNE)
AGMs: Viva Energy (VEA)
Final Thought
With the ASX 200 set for a strong start and the RBA expected to ease monetary policy, attention will turn to how local equities respond to a shifting rate environment. Meanwhile, Wall Street’s resilience suggests investors are more focused on earnings and policy outlooks than ratings agencies — at least for now.
