ASX set to slide as Wall Street dips; BP-Shell merger rumours
US stocks are hanging near their all-time high as financial markets catch a breath following two big days bolstered by hopes that the Israel-Iran war will not disrupt the global flow of crude oil.
The S&P 500 fell 0.1 per cent in afternoon trading and is sitting just 0.9 per cent below its all-time high. The Dow Jones was down 173 points, or 0.4 per cent, and the Nasdaq composite was 0.1 per cent higher.
The Australian sharemarket is set to retreat, with futures at 5.01am AEST pointing to a fall of 38 points, or 0.5 per cent, at the open. The ASX edged higher on Wednesday. The Australian dollar strengthened. It was 0.4 per cent higher at 65.13 US cents at 5.14am.
In the oil market, which has been the centre of much of this week's action, crude prices stabilised after plunging by roughly $US10 per barrel in the last two days. Benchmark US crude rose 1.5 per cent to $US65.37 per barrel, though it still remains below where it was before the fighting between Israel and Iran broke out nearly two weeks ago.
A fragile ceasefire between the two countries appears to be holding, at least for the moment.
On Wall Street, BP shares jumped as much as 10 per cent in New York after the Wall Street Journal reported that Shell is in early-stage talks to acquire its London-based rival in a blockbuster deal.
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Discussions between company representatives are active, but any terms of a potential deal couldn't be learned and a transaction is far from certain, the newspaper reported, citing people familiar with the matter. However, Shell denied any talks, sending shares falling. BP was 1.2 per cent higher in late trade.
Companies involved in the cryptocurrency industry rose as the price of bitcoin continued to steam ahead with investors willing to take on more risk. Coinbase Global, the crypto exchange, climbed 1.6 per cent, and Robinhood Markets gained 0.3 per cent as bitcoin topped $US107,000 ($164,000).
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Perth Now
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Three of Australia's big four banks predict the Reserve Bank will cut interest rates by 25 basis points at its next meeting on July 8 following better-than-expected inflation numbers. Despite predictions of inflation remaining steady, headline inflation for May fell to 2.1 per cent from 2.4 per cent the previous month, driven by a drop in the cost of fuel and rental prices. Trimmed mean inflation, which removes volatile price movements, dropped from 2.8 per cent to 2.4 per cent. Westpac analysts joined those from NAB and Commonwealth Bank in bringing forward their next forecast for rate cuts to July, with ANZ the last holdout of the big four tipping August. But Westpac chief economist Luci Ellis said a July cut was no shoo-in, with Australia's tight labour market and slow productivity growth still making the Reserve Bank uneasy about inflation pressures. A 25 basis point reduction in the cash rate would shave $90 off monthly repayments for a mortgage holder with a $600,000 loan. More than $16 billion was wiped from superannuation balances at the start of the year as uncertainty over Donald Trump's tariffs impacted Australians' net worth. The nation's collective household wealth grew by 0.8 per cent to $17.3 trillion in the first three months of 2025, the Australian Bureau of Statistics reported on Thursday. But it would have increased by more if not for the value of super accounts falling for the first time since September 2022 as global uncertainty weighed on share prices, ABS head of finance statistics Mish Tan said. The increase in wealth was again mainly driven by an increase in residential property values, which rose 1.2 per cent to $125.3 billion. House prices have rebounded from a brief slowdown at the end of 2024 as interest rate cuts boosted buyer demand. With as many as three more cuts predicted by December, and market expectations rising for the next one as soon as July, property values are set to keep growing. Superannuation balances fell by 0.4 per cent, or $16.4 billion, as Mr Trump's tariff threats sparked fears of trade disruption and slower economic growth. Equity markets reacted even more violently when Mr Trump unveiled his "liberation day" tariffs on April 2, but share prices have since recovered as tensions eased between the US and China. However, the US president poses another risk to super funds. The $4.2 trillion industry has warned that a section of Mr Trump's proposed "big beautiful bill" would include a "revenge tax" on investors from countries that have imposed taxes on US investors and companies the administration deems unfair. With more than $600 billion of investments parked in the US, super funds have warned the tax could deal a multibillion-dollar hit to returns. In a conversation with his US counterpart, Treasurer Jim Chalmers on Wednesday urged Scott Bessent to spare Australian investors. "We do not want to see our investors and our funds unfairly treated or disadvantaged when it comes to developments out of the US Congress," Dr Chalmers said. "And once again, I'm very grateful to Scott Bessent for hearing me out and for also undertaking to make what progress he can to try and resolve these issues. I'm confident he understands these issues." With more demand for mortgages, household borrowing grew 1.4 per cent, or $2.4 billion, reducing the overall growth in wealth by 0.2 percentage points. "The RBA's cash rate cut in February this year was the first easing of interest rates since November 2020, giving some relief to household budgets in the March quarter through lower mortgage interest payments," Dr Tan said. "We expect to see the broader impact of recent cuts, including another in May, on house prices and credit growth later this year." Three of Australia's big four banks predict the Reserve Bank will cut interest rates by 25 basis points at its next meeting on July 8 following better-than-expected inflation numbers. Despite predictions of inflation remaining steady, headline inflation for May fell to 2.1 per cent from 2.4 per cent the previous month, driven by a drop in the cost of fuel and rental prices. Trimmed mean inflation, which removes volatile price movements, dropped from 2.8 per cent to 2.4 per cent. Westpac analysts joined those from NAB and Commonwealth Bank in bringing forward their next forecast for rate cuts to July, with ANZ the last holdout of the big four tipping August. But Westpac chief economist Luci Ellis said a July cut was no shoo-in, with Australia's tight labour market and slow productivity growth still making the Reserve Bank uneasy about inflation pressures. A 25 basis point reduction in the cash rate would shave $90 off monthly repayments for a mortgage holder with a $600,000 loan. More than $16 billion was wiped from superannuation balances at the start of the year as uncertainty over Donald Trump's tariffs impacted Australians' net worth. The nation's collective household wealth grew by 0.8 per cent to $17.3 trillion in the first three months of 2025, the Australian Bureau of Statistics reported on Thursday. But it would have increased by more if not for the value of super accounts falling for the first time since September 2022 as global uncertainty weighed on share prices, ABS head of finance statistics Mish Tan said. The increase in wealth was again mainly driven by an increase in residential property values, which rose 1.2 per cent to $125.3 billion. House prices have rebounded from a brief slowdown at the end of 2024 as interest rate cuts boosted buyer demand. With as many as three more cuts predicted by December, and market expectations rising for the next one as soon as July, property values are set to keep growing. Superannuation balances fell by 0.4 per cent, or $16.4 billion, as Mr Trump's tariff threats sparked fears of trade disruption and slower economic growth. Equity markets reacted even more violently when Mr Trump unveiled his "liberation day" tariffs on April 2, but share prices have since recovered as tensions eased between the US and China. However, the US president poses another risk to super funds. The $4.2 trillion industry has warned that a section of Mr Trump's proposed "big beautiful bill" would include a "revenge tax" on investors from countries that have imposed taxes on US investors and companies the administration deems unfair. With more than $600 billion of investments parked in the US, super funds have warned the tax could deal a multibillion-dollar hit to returns. In a conversation with his US counterpart, Treasurer Jim Chalmers on Wednesday urged Scott Bessent to spare Australian investors. "We do not want to see our investors and our funds unfairly treated or disadvantaged when it comes to developments out of the US Congress," Dr Chalmers said. "And once again, I'm very grateful to Scott Bessent for hearing me out and for also undertaking to make what progress he can to try and resolve these issues. I'm confident he understands these issues." With more demand for mortgages, household borrowing grew 1.4 per cent, or $2.4 billion, reducing the overall growth in wealth by 0.2 percentage points. "The RBA's cash rate cut in February this year was the first easing of interest rates since November 2020, giving some relief to household budgets in the March quarter through lower mortgage interest payments," Dr Tan said. "We expect to see the broader impact of recent cuts, including another in May, on house prices and credit growth later this year." Three of Australia's big four banks predict the Reserve Bank will cut interest rates by 25 basis points at its next meeting on July 8 following better-than-expected inflation numbers. Despite predictions of inflation remaining steady, headline inflation for May fell to 2.1 per cent from 2.4 per cent the previous month, driven by a drop in the cost of fuel and rental prices. Trimmed mean inflation, which removes volatile price movements, dropped from 2.8 per cent to 2.4 per cent. Westpac analysts joined those from NAB and Commonwealth Bank in bringing forward their next forecast for rate cuts to July, with ANZ the last holdout of the big four tipping August. But Westpac chief economist Luci Ellis said a July cut was no shoo-in, with Australia's tight labour market and slow productivity growth still making the Reserve Bank uneasy about inflation pressures. A 25 basis point reduction in the cash rate would shave $90 off monthly repayments for a mortgage holder with a $600,000 loan.
