Futures suggest a 22-point, or 0.3 per cent, gain for the ASX at the open. This offers a modest rebound after the local market dipped 0.5 per cent on Thursday. Wall Street provided little clear direction, ending a volatile session with mixed results.
The S&P 500 inched down less than 0.1 per cent, while the Dow Jones also dipped marginally. The Nasdaq, however, managed a 0.3 per cent gain. This was driven primarily by the strength of large-cap technology stocks. Major players like Alphabet and Nvidia helped offset broader market weakness, with both companies notching solid gains.
Investors continue to digest the implications of a new tax cut bill passed by the US House of Representatives. The legislation expands upon tax breaks introduced during President Donald Trump’s first administration and could add trillions to the US debt. This has unsettled the bond market, which has become the focal point of investor anxiety this week.
US Treasury yields remained volatile. The yield on the 10-year note surged as high as 4.63 per cent during the session before settling back to 4.54 per cent. Elevated yields increase borrowing costs for both the government and private sector, and tend to discourage stock buying.
The market has also been impacted by concerns around the rollback of clean energy tax credits included in the spending bill. This policy shift sent shockwaves through the solar sector, with shares of companies like Sunrun and Enphase Energy plunging. The healthcare sector was also under pressure following regulatory updates around Medicare audits.
Despite the cautious mood, there were a few bright spots. A fresh report from S&P Global showed a surprise uptick in US manufacturing and services activity in May, bouncing back from a slower April. The data indicated improved business confidence, largely attributed to a pause on higher tariffs.
Many businesses are stockpiling inventory ahead of potential tariff hikes in July, adding further inflationary pressure. Retailers have already flagged price increases due to higher import duties.
The Australian dollar mirrored the cautious sentiment, falling 0.3 per cent to 64.14 US cents in early trading. As global markets digest mixed economic signals and brace for further volatility, the ASX’s modest expected rise offers a brief reprieve amid broader uncertainty. Traders will be watching closely to see if this early momentum can be sustained through the day.
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