Table of Contents
ASX Live Coverage Summary – May 21
Welcome to Our Coverage
We are pleased to present live updates on the ASX for Wednesday, May 21. Please remember to refresh your browser for the latest information and share your feedback through our survey.
US Dollar Weakness Forecast
Market Trends
As of 9:00 AM, the US Dollar Index has fallen by 0.95% in the past two trading sessions, hovering around 100.0, close to a recent low of 97.9. Analysts are predicting a continued decline in the dollar due to upcoming fiscal and trade announcements.
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Citi: Anticipates ongoing dollar weakness following G7 meetings, with the White House advocating for tariff reductions. Treasury Secretary Bessent may encourage currency appreciation amongst major trading partners, particularly Japan and China, influencing BoJ policies in relation to US-Japan trade discussions.
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Deutsche Bank: Suggests that a weakening dollar and rising yields indicate a diminishing interest in financing US deficits, leading to potential financial stability risks.
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Bank of America: Warns that new fiscal measures from Congress may exacerbate the deficit, potentially prompting a bond market reaction as increased Treasury supply could hike borrowing costs and weaken the dollar further, counteracting anticipated growth from the legislation.
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Apollo: Observes a decline in indirect bidding at recent 30-year Treasury auctions, pointing to diminished foreign demand, a key factor for dollar support.
- HSBC: Maintains that without significant changes in trade policy, the US Dollar Index (DXY) at 100 will be a stabilising level, implying no new trend will emerge.
Top Stories from Livewire
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RBA Rate Cuts: Betashares’ economist, David Bassanese, predicts that the Reserve Bank of Australia (RBA) could lower rates to 2% if a recession hits the US. This follows an unexpected rate cut to 3.85%, which has triggered concerns over potential inflation as borrowing rates decline.
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Copper Market Resilience: Despite fears of a global economic slowdown, copper prices remain robust, bolstered by proactive import strategies from US manufacturers and strong demand from China reflected by significant inventory reductions. Long-term demand from sectors like electrification, AI, and renewable energy continues to enhance copper’s investment appeal.
- Gold Outshining Stocks: As fears of stagflation grow, investor sentiment has shifted from optimism towards caution. Concerns surrounding a bear market in equities have highlighted gold as a desirable safe-haven asset, historically yielding positive returns during times of economic uncertainty.
Stock Market Drivers
Market Conditions
As of 8:40 AM, futures for the S&P/ASX 200 are up by 52 points (+0.62%), despite a weak performance from Wall Street the previous night. Key factors influencing stock market activity include:
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No significant developments in trade negotiations, although India is in talks for a multi-stage trade agreement with the US, while Japan has stated it is not in a hurry to reach a deal.
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Federal Reserve officials are advocating for patience, despite the market anticipating roughly 50 basis points of rate cuts by year-end.
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Recent reductions in interest rates by both the RBA and Chinese policymakers were expected and already priced into the market.
- Goldman Sachs estimates corporate buybacks are around US$5 billion daily, providing market support, alongside systematic strategies rebuilding leverage, albeit at a slower pace.
Good Morning!
In summary, despite a lack of major catalysts or directional drivers in the market, optimism remains regarding future corporate buybacks and anticipated rate cuts. Stay tuned for further updates as the day progresses.
This summary encapsulates the significant aspects of today’s market outlook, emphasizing key insights and trends that could influence investment strategies.
