ASX in three-day winning streak after bright start to week

Real estate listings business Domain, which is majority owned by this masthead’s owner, Nine Entertainment, rose 0.2 per cent after it said it had extended a period of exclusivity with Co-Star, which is looking to buy Domain.

The big four banks were mixed, with NAB climbing by 1.7 per cent, ANZ adding 1.6 per cent, and Westpac edging up 0.8 per cent.

However, Commonwealth Bank – the nation’s biggest lender – shed 1.1 per cent.

Packaging business Amcor rose 0.3 per cent, and James Hardie Industries added 1.2 per cent after sticking by its decision to avoid shareholder approval of its contentious $14 billion acquisition.

The laggards

The miners were the only sector in the red, dragged by market heavyweight BHP which lost 1.1 per cent. Gold miners Fortescue (down 0.3 per cent) and Newmont (down 1.3 per cent) both fell.

Pallet giant Brambles fell 5 per cent after it downgraded its revenue growth forecast, citing uncertain market conditions. Biotech darling Telix Pharmaceuticals slumped 6.6 per cent after it told the market that its latest drug – TLX101-CDx (Pixclara), an agent used in the imaging of a rare brain cancer – had run into regulatory trouble in the US.

The lowdown

A key event for markets this week will be Wednesday’s release of the March quarter consumer price index, which economists expect will show inflation was in the Reserve Bank’s 2 to 3 per cent target band. Investors are betting the RBA will cut interest rates at its next meeting on May 20.

Josh Gilbert, market analyst at eToro, said that this week’s reading is crucial for the rate decision which will be handed down in May.

“Recent inflation data has continued to show prices easing, with February’s data weaker than expected. If this week’s quarterly inflation data continues to match the easing we’ve seen from the monthly figures, then a rate cut in May looks very likely, with markets seeing a 100 per cent chance of a 25 basis point cut,” Gilbert said.

“So is relief likely? Yes, but we are also not necessarily insulated from the potential impact of a US recession, which, while still unlikely, is a perpetual risk as Trump’s tariffs continue to throw markets into unpredictable cycles,” he said.

On Friday in the US, worries about the economic fallout from tariffs drove US consumer sentiment to one of its lowest readings on record, while long-term inflation expectations climbed to the highest since 1991.

A surge in megacaps sent the S&P 500 above 5500 points, with the gauge notching its longest advance since January, while bonds and the US dollar rose. Tesla jumped 9.8 per cent while Alphabet climbed on solid results. Equities briefly lost steam as Trump suggested another delay to reciprocal tariffs was unlikely, and he wouldn’t drop levies on China without “something substantial” in return.

As profit margins remain close to record levels, corporate America has some room to absorb costs from higher tariffs. However, the track record of S&P 500 companies over the past two decades suggests their ability to withstand additional levies is fragile, at least by one measure.

Nearly all the margin growth eked out from corporate sales on the gauge since 2004 has come from the booming technology sector, according to Bloomberg Intelligence. Removing the group, profitability barely rose.

Bank of America strategists led by Michael Hartnett warned that the conditions for sustained gains in US stocks and the dollar are missing.

The greenback is in the midst of a longer-term depreciation while the shift away from US assets has further to go, they noted. The trend would continue until the Federal Reserve starts cutting rates, the US reaches a trade deal with China and consumer spending stays resilient.

Foreign investors have sold $US63 billion ($98.6 billion) of US equities since the start of March, Goldman Sachs Group strategists estimate, noting that the data from high-frequency fund flows suggest that European investors have been driving the selling, while other regions have continued to buy US stocks.

Forecasters anticipate the trade war will hit economic growth this year and next as tariffs push prices higher and put a dent in consumer spending.

The US economy is set to expand 1.4 per cent in 2025 and 1.5 per cent in 2026, according to the latest Bloomberg survey of economists, compared with 2 per cent and 1.9 per cent in last month’s poll. The median respondent now sees a 45 per cent chance of a downturn in the next 12 months, up from 30 per cent in March.

All up, the S&P 500 rose 0.7 per cent, the Nasdaq 100 rose 1.1 per cent and the Dow Jones Industrial Average was little changed.