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.
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 index is now just 2.5 per cent shy of its record high in February.
US shares dropped in late trade on Friday and bond yields climbed after credit ratings agency Moody’s downgraded US debt one notch to Aa1, citing high government debt and increased interest costs. The downgrade came as Congress made progress on a bill proposed by President Donald Trump that includes permanent tax reductions and an increase in the US debt ceiling by $US4 trillion.
In Australia, the main game for investors this week will be the Reserve Bank’s board meeting on Tuesday when a cash rate cut is expected by traders and economists alike. Money markets are pricing in a 99 per cent chance of a one quarter of percentage point reduction 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 into the impact of the US’ former 145 per cent tariff rate on its imports from the Asian nation. 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 held their first direct talks in more than three years, and iron ore fell back below $US100 a tonne.
Source: https://www.afr.com/markets/equity-markets/asx-to-slip-moody-s-us-credit-downgrade-in-focus-20250519-p5m09u