11 June Markets at a glance

Around the grounds

• ASX set to snap three-day rally
• Dalian iron ore futures slide 3.4%
• Business conditions soften in May
• US CPI & FOMC meeting on tap

The S&P/ASX200 is on track to snap a three-day winning streak in a broad-based sell-off as investors take a cautionary stance ahead of key U.S. inflation figures and the Fed’s policy announcement. The miners are the biggest losers, with the index touching its lowest level since early May, while interest-rate sensitive financial stocks are also under pressure with the “Big four” shedding between 1% and 1.3%.

Gold stocks are taking a hit, down nearly 6%, while energy is also lower.

Switching gears to the economy, NAB’s monthly business survey showed conditions eased further in May, falling below their long-run average as growth in sales and profits slowed, while cost pressures showed signs of re-accelerating in the month.

Business confidence also fell, down 5 points to -3 with NAB Chief Economist Alan Oster saying the results were a mixed bag for the RBA. Adding “there are warning signs on the outlook for growth but at the same time the central bank needs to be wary about inflation”. NAB expects the Australian central bank to keep rates on hold for “some time as they navigate through these contrasting risks”.

In the news

Australian listed shares of Bapcor (BAP) are among the day’s top performers on the local bourse, with the stock on track for its best day since March 2020, if gains hold.

It comes after the vehicle parts provider confirmed a non-binding indicative buyout offer from Bain Capital, in a deal valuing the company at AU$1.8 billion. Under the proposal, BAP shareholders will receive AU$5.40 cash per share.

Shares of Woodside Energy (WDS) are also in focus, see-sawing from positive to negative, as the company says it has achieved first oil production from the Sangomar field offshore oil project in Senegal.

Rio Tinto (RIO) shares are lower after the mining giant said it would buy Mitsubishi Corp’s 11.65% stake in Boyne Smelters for an undisclosed sum.

Finally, Australian listed shares of Titomic (TTT) surged in early trade but have since given back those gains, after the metal additives maker said Woodside Energy will use the company’s D523 Systems at its North Rankin offshore gas platform in the Indian Ocean. The D523 system is a low-pressure cold spray system used for building, coating and repairing soft metals.

Going global

Of course, the US Federal Reserve (FOMC) has kicked-off its two-day policy meeting. While no change to policy is expected tomorrow, officials will provide an update on the economic and interest rate projections, the dot plots. NAB expects the median 2024 dots to be pared to two cuts this year. The market is pricing in an over 80% chance for the first rate cut in September, according to the CME FedWatch Tool.

Sticking with central banks, the Bank of Japan (BOJ) meets on Friday where investors widely expect a reduction in the central bank’s monthly government bond purchase.

Both the BOJ and Japanese government are aligned on trying to limit weakness in the yen after the currency plunged to a 34-year low of 160.245 against the greenback at the end of April which saw several rounds of official Japanese intervention.

Elsewhere in forex, the euro is flat after plunging in yesterday’s session after gains by the far right in European Parliament elections saw French President Emmanuel Macron call a snap election.

The big dollar is little changed with the market eyeing this week’s CPI data – which is expected to ease to 0.1% from 0.3% last month, though core pressures are forecast to remain steady on the month at 0.3%.

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