31 May Markets at a glance

The S&P/ASX200 has recovered from yesterday’s sell-off, trading higher and on track to snap a three-day slide.

Commodities and financials are leading the charge, as investor woes over a “higher for longer” interest rate environment were tempered on the heels of a downward revision to first quarter US GDP. 

Sector specific, gold stocks are higher, tracking bullion prices, energy also in the black after a seven-session losing streak.

Overall global equities remain on the back foot as traders worry about rising rates and the reticence of the US Federal Reserve to cut them. All eyes remain on tonight’s PCE indicator, the Fed’s preferred measure of inflation, for any clues on the path of policy.

Markets are currently pricing in a 55% chance of rate cuts to begin in September, up from 51% the day before, according to the CME Group's FedWatch Tool.

Locally on the interest rate outlook, markets are back to pricing in a 12% chance of a hike from the Reserve Bank of Australia (RBA), down from 27% yesterday.

On currency markets, the greenback is tracking sideways ahead of that key PCE data drop tonight, though has regained some lost ground after a downward revision to U.S. GDP for the first quarter suggests there may be room for rate cuts this year.

The Japanese yen is holding around 156.77, after touching a four-week low earlier in the week and has brushed off a surprise rise in CPI.

The Australian dollar (AUD) is taking a breather to trade flat after a week of relatively choppy trade. This after China’s official purchasing mangers’ index (PMI) surprised to the downside and slipped into contractionary territory at 49.5 in May, dampening investors hopes the Tiger economy was picking up steam.

The Euro is flat, while sterling is unchanged.

Stock specific, the broader healthcare sector is getting a boost thanks to Telix Pharmaceuticals (TLX).  Shares have jumped to touch a record high after the company unveiled positive data from a clinical trial.

Australian listed shares of Select Harvest (SHV) are also tracking higher in this Friday session, as the almond product posts a narrowing half year loss on a year ago of AU$2.1 million (compared with the AU$96.2 million on PCP).

Rio Tinto (RIO) has entered into an agreement to buy Sumitomo Chemical’s 20.64% stake in New Zealand Aluminium Smelters (NZAS) to get control of the country’s only aluminium smelter, though the value of the deal has not been revealed. 

And in IPO land, Australian fast food chain Guzman y Gomez will aim to raise AU$242.5 million in a June initial public offering.

In a company statement GYG says it will sell 11.1 million shares at AU$22 each which will value the Mexican food chain around AU$2.2 billion.

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