The Australian share market is poised to open higher on Wednesday, with ASX 200 futures climbing 18 points (+0.21%) by 8:30 am AEST. Investor sentiment has been buoyed by Wall Street’s rebound and a surprisingly soft US inflation read that reinvigorated risk appetite across global markets.
US Markets: Tech Rebounds Drive S&P 500 Recovery
Overnight, the S&P 500 closed up 0.72% at 5,887, managing to claw back its year-to-date losses and settling within 4% of its February record high. The tech-heavy Nasdaq led the charge, rising 1.61% as heavyweight names rallied following a dip in inflation expectations. The Dow Jones, however, bucked the trend, slipping 0.64% as financial and defensive sectors underperformed.
A cooler-than-expected US CPI print for April—rising just 0.2% month-over-month versus expectations of 0.3%—helped push bond yields lower and rekindled enthusiasm for growth assets. The shift prompted a strong rotation out of defensive plays such as Healthcare (-2.97%), Consumer Staples (-1.24%), and Real Estate (-1.30%), and back into high-growth sectors like Information Technology (+2.25%) and Consumer Discretionary (+1.41%).
Goldman Sachs responded by upgrading its year-end S&P 500 target to 5,900, citing easing tariff tensions between the US and China as another tailwind for equities. The investment bank also lowered its odds of a US recession in 2025.
Global Markets and Commodities
In other global benchmarks, Japan’s Nikkei rose 1.43%, Germany’s DAX added 0.31%, and Canada’s TSX gained 0.33%. Conversely, Chinese equities fell, with the Hang Seng down 1.87% amid concern that a US-China trade truce could lessen the urgency for further fiscal stimulus from Beijing.
Commodity markets were mixed. Oil surged 2.78% to US$63.67 a barrel on optimism about global trade, while copper climbed 1.24% to US$4.723 per pound. Gold held steady at US$3,247.8 an ounce. In crypto, Bitcoin rose 1.75% to US$104,305 and Ethereum spiked over 8% in Australian dollar terms.
The Australian dollar rallied 1.51% to US$0.6467, buoyed by the US inflation data and growing optimism around trade flows.
ASX in Focus: CBA, Aristocrat Earnings in Spotlight
On the domestic front, investors will be closely watching the latest earnings reports from Commonwealth Bank (ASX: CBA) and Aristocrat Leisure (ASX: ALL).
CBA delivered a relatively in-line third-quarter result, with net interest margins stabilising and credit growth holding firm. The bank cited modest growth in mortgage and business lending but flagged ongoing cost pressures and regulatory challenges ahead.
Meanwhile, Aristocrat Leisure disappointed the market, missing consensus profit expectations despite solid revenue growth in digital gaming. Investors reacted to higher-than-expected operating costs and a cautious outlook for its US business following recent acquisitions.
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Central Banks and Macro Themes
Markets are now pricing in fewer interest rate cuts from the Reserve Bank of Australia (RBA) in 2025—three in total—compared to at least five before the US-China tariff détente. Bond yields have adjusted accordingly as traders reassess the global economic landscape.
A May survey by Bank of America (BofA) revealed that although fund managers remain wary, sentiment is beginning to improve. The proportion of respondents expecting weaker global growth dropped to 59% from 82% the previous month. “Soft landing” has overtaken “hard landing” as the most likely asx macroeconomic scenario.
Interestingly, allocations to US equities have dropped to a two-year low, while cash levels remain relatively high at 4.5%. Long gold has now overtaken long “Mag-7” tech stocks as the most crowded trade.
Trade Developments: Tariff Truce Spurs Optimism
Trade headlines have also added fuel to the rally. The ASX US and China reached a Asx preliminary agreement to ease tariffs, prompting American companies to restart supply chains and logistics operations. China is set to lower tariffs on a range of US goods starting May 14 and has lifted a ban on Boeing aircraft deliveries.
However, the truce has shifted pressure to other countries like Mexico and Vietnam, which may now need to renegotiate terms with the US to remain competitive under the “China-plus-one” strategy.
Key Corporate Moves
- Nvidia struck a deal with Saudi Arabia to deliver 18,000 AI chips and build next-gen data centers.
- Microsoft announced job cuts impacting 6,000 employees amid ongoing restructuring.
- Apple teased a new AI-powered battery management system set to debut with iOS 19.
- Coinbase shares surged over 20% after being added to the S&P 500, replacing Discover Financial.
- Bayer exceeded earnings forecasts, driven by strong sales in its pharma division.
Outlook
With global inflation easing, geopolitical tensions thawing, and tech giants back in favor, the risk-on mood could carry through to the ASX session today. However, local earnings results and commentary from CBA and Aristocrat may drive stock-specific volatility. All eyes will remain on inflation trends, central bank policy cues, and the durability of the recent US-China trade momentum.
