ASX Futures Fall After Uneven Wall Street Session
S&P/ASX 200 futures dropped 37 points or 0.43% following a mixed US session. The Nasdaq closed at fresh record highs while the Equal-weight S&P 500 Index fell 0.72%, pointing to weak breadth in equity performance. Tech and AI stocks surged again, but most sectors remained subdued.
Trade Tensions And Weak FedEx Outlook Weigh On Sentiment
US markets saw limited movement apart from technology shares. FedEx shares declined 3.2% after warning that profit for the quarter will miss expectations. The company did not issue full-year guidance, citing soft demand and trade war uncertainty. A recent survey found 40% of CFOs had delayed or cancelled capital expenditure due to tariffs.
US-China Tariff Risks And New Trade Deals In Focus
The market focused on the approaching 9 July reciprocal tariff deadline. Reports suggested the US is close to trade deals with Japan, South Korea and Vietnam. Trump’s administration defended its tariff powers in court, seeking to overturn a decision declaring levies unconstitutional. The US and Mexico are negotiating a quota system for steel imports. Trump also threatened higher tariffs on Spain due to its low NATO spending.
Geopolitical Tensions Ease Amid Fragile Ceasefire
The Israel-Iran ceasefire remains in place following US airstrikes on Iranian nuclear sites. Reports indicated limited damage to Iran’s infrastructure. Trump plans to speak with Iran next week and hinted at a possible nuclear deal. China vowed retaliation against Taiwan’s technology policies after new blacklists targeted Chinese firms.
Inflation Data Sparks Rate Cut Speculation In Australia
Australia’s monthly inflation slowed to 2.1% in May from 2.4% in April, below the 2.3% forecast. UBS noted that core inflation also eased, with trimmed mean CPI falling to 2.4%, its lowest since November 2021. UBS expects Q2 headline CPI to reach 2.3%, above the RBA’s 2.1% forecast. The market now prices a 90% chance of a 23bps rate cut on 9 July.
Citi’s Index Signals Weakening US Economic Momentum
Citi’s Economic Surprise Index fell to a 10-month low as recent data underperformed. The US labour market softened, with jobless claims reaching levels last seen in 2023. Housing indicators also lagged, with May starts and permits falling and existing sales reaching the lowest point since 2009. Business surveys signalled weak capital expenditure expectations.
Powell Stays Cautious On Rate Cuts And Inflation
Fed Chair Powell maintained his position on interest rates, indicating no rush to cut. He acknowledged potential for future trade deals to influence rate policy. Powell highlighted that tariffs will likely raise inflation, although possibly for a short duration. The Fed sees no current signs of stagflation but continues to monitor risks.
Civmec Expands Shipbuilding Capability With New Acquisition
Civmec announced the acquisition of Luerssen Australia for $20 million cash, fully funded from existing reserves. Luerssen is a naval shipbuilder based in Western Australia with operations in South Australia. The acquisition will bolster Civmec’s defence sector capacity. The announcement lacked earnings guidance, but Civmec’s $530 million market capitalisation contextualises the acquisition scale.
GenusPlus Lifts FY25 Guidance Amid Robust Orderbook
GenusPlus upgraded its FY25 EBITDA guidance to 28–32% growth, up from 20%. The improvement followed new contracts and strong industry momentum. A $20 million contract from Arc Infrastructure supports its positive outlook. The company anticipates continued growth into FY2026. The stock has risen 13% over the past month and 43.5% year-to-date.
Aurizon Cuts Guidance, Flags Coal Volume Headwinds
Aurizon downgraded its FY25 EBITDA forecast to $1.57 billion, 7.6% below its earlier low-end target. Lower coal volumes on the Central Queensland network and untriggered Take-or-Pay clauses deferred $50 million in revenue to FY27. Analysts from Macquarie identified ongoing coal weakness as the main driver. “April/May coal volumes are still hurting. This creates a drag, albeit it is one off in nature.” They noted the company’s 6-7% yield may offer valuation support.
Aurizon also restructured its leadership. George Lippiatt becomes Group Executive for Bulk and Containerised Freight. Gareth Long was appointed acting CFO. Anna Dartnell will depart.
Xero Raises $1.85bn To Fund US Acquisition
Xero completed a $1.85 billion institutional placement at $176 per share, a 9.4% discount to its last close. The funds support the acquisition of Melio, a US payments firm. E&P analyst Paul Mason highlighted Melio’s strategic fit within Xero’s “3×3” growth strategy. The acquisition values Melio at 13.4x EV/Revenue on US$187 million annual revenue.
UBS projects US$70 million revenue and US$20 million cost synergies by FY28. Melio’s low margins may dilute Xero’s profitability. Citi maintained a Buy rating with a $210 price target. They estimate 15% upside to FY28 consensus revenue forecasts. Free cash flow could hit $850 million by FY28, though per-share figures may see 5% dilution.
Austal Remains In Spotlight Amid Defence Momentum
Citi analysts raised Austal’s target price from $4.09 to $6.10 and changed its rating to “Neutral/High Risk”. The analysts cited rising defence budgets in Australia and the US and lower execution risk. “Difficult to be negative on Austal,” Citi said. The possible finalisation of the Strategic Shipbuilding Agreement could add $4 billion in contracts. Austal shares have surged 93% year-to-date and 146% in the past year.
