Australian shares are tipped to rise 1 per cent after economic data in both Australia and the US supported expectations that central banks are gearing up to cut interest rates.
ASX futures are pointing up 80 points, or 1 per cent to 8411, predicting the S&P/ASX 200 Index will hit a three-month-high.
On Wall Street, equities advanced after weaker-than-expected economic data heightened speculation America’s central bank will act to stave of weaker growth.
Prices paid to US producers unexpectedly declined by the most in five years, suggesting companies are absorbing some of the hit from higher tariffs. US April retail sales data came in softer than expected, signalling weaker consumer demand.
JPMorgan boss Jamie Dimon told Bloomberg that he was not ready to take a US recession off the table: “If there is a recession, I don’t know how big it would be or how long it would last.”
Money markets are now priced in for two interest rate cuts by the US Federal Reserve this year, prompting a 10 basis point slide in the 10-year Treasury yield. The S&P 500 reversed an early loss, rising 0.4 per cent. The Nasdaq slipped while the Dow closed up 0.7 per cent.
Australian bond traders shrugged off stronger-than-expected labour force data on Thursday and doubled down on bets the Reserve Bank of Australia will cut the policy rate on Tuesday. In good news for equities, money markets are almost fully priced for a quarter-point rate cut.
Source: https://www.afr.com/markets/equity-markets/asx-to-rise-s-and-p-500-edges-up-20250516-p5lzo8