ASX to slip, Moody's US credit downgrade in focus
The Australian sharemarket is set to snap its longest winning streak since August – and traders will be watching for any outsized market reaction to Moody's move to strip the US of its AAA credit rating.
ASX futures are pointing down 7 points, or 0.1 per cent to 8360, predicting the S&P/ASX 200 Index will pause for breath after closing last week at a three-month-high. The ASX 200 is now just 2.5 per cent shy from its record high in February.
US shares dropped in late hours trading on Friday, and bond yields climbed, after credit ratings agency Moody's downgraded US debt one notch to Aa1, citing huge government debt and higher interest costs. The downgrade came as congress made progress on a tax bill proposed by US President Donald Trump that includes permanent tax reductions and a proposal to increase the US debt ceiling by $US 4 trillion.
In Australia, the main game for investors this week will be the outcome of the Reserve Bank of Australia's board meeting, where an interest rate cut is all but expected by traders and economists alike.
Money markets are pricing in a 99 per cent chance of a quarter-point rate cut to 3.85 per cent, followed by two more by Christmas, though some argue the RBA should keep rates on hold.
Economic data from China on Monday will provide Australian investors with a glimpse in to the impact of the US' former – and much more punitive – 145 per cent tariff rate on its imports from China. Industrial production is expected to have decelerated in April to 5.7 per cent, down from 7.7 per cent in March, while retail sales data is expected to show a small decline.
In commodities, gold tumbled, nearing $US3200 an ounce, as Russia and Ukraine began their first direct talks in more than three years, and iron ore fell back below $US100 a tonne.
Stocks to watch
Helloworld has scooped up 5 per cent of rival Webjet in Friday's trading, lifting its stake to about 10 per cent, Street Talk reported.
And investors who bought into a special fund holding Melbourne Airport marketed by Dexus have retained their own lawyers as they gear for a legal battle between the ASX-listed property group and its co-investors.
Market highlights
ASX futures are pointing down 7 points or 0.1 per cent to 8360.
All US prices as of 5.20pm New York time on Sunday (Monday 7.20am AEST).
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