Australian Markets Steady Despite Early Tariff Concerns, May Ends on a High

Image Source : Krish Capital Pty Ltd

Index Update: The S&P/ASX 200 closed higher on Friday, rising 24.90 points or 0.30% to 8,434.70, capping a positive May where the benchmark rallied 3.8%, its best month since January. Over the past month, all 11 sectors posted gains alongside the index. However, Australian shares traded flat in the early hours on Friday following an update on Trump administration tariffs, a day after they were blocked by a trade court. Over the last five days, the index has gained 0.88% and remains 2.10% below its 52-week high. Seven of the 11 sectors ended higher Friday, with utilities leading the gains at +1.18%, recovering from a recent decline despite being down 0.68% over the past five days.

Macro Update: Industry-wide operating profits in Australia declined by 8.6 per cent in 2023–24, according to new data released by the Australian Bureau of Statistics (ABS), highlighting the toll taken by inflationary pressures, rising interest rates, and weaker global demand. Despite the overall downturn, the transport industry recorded the largest rise in operating profit, reaching AUD 19.4 billion. Meanwhile, in the retail sector, turnover slipped by 0.1 per cent in April 2025, following modest gains in March (0.3 per cent) and February (0.2 per cent). While Queensland saw some recovery from the disruption caused by ex-Tropical Cyclone Alfred, retail performance varied across sectors. Notably, clothing, footwear, and personal accessory retailing, along with department stores, saw the steepest declines, both falling by 2.5 per cent.

Top Market Movers: On Friday, Ramsay Health Care Limited (ASX: RHC) led the gainers, rising 5.89% to AUD 38.30, followed by West African Resources Limited (ASX: WAF), which increased 5.60% to AUD 2.83. Fisher & Paykel Healthcare Corporation Limited (ASX: FPH) gained 5.27% to AUD 33.93. On the downside, Pilbara Minerals Limited (ASX: PLS) fell 5.70% to AUD 1.24, IGO Limited (ASX: IGO) dropped 5.37% to AUD 3.88, and The Lottery Corporation Limited (ASX: TLC) decreased 5.03% to AUD 5.10.

Commodity Update: The U.S. dollar weakened on Friday, marking its fifth consecutive monthly decline amid trade and fiscal uncertainty. Investors turned cautious ahead of a key inflation report. Gold slipped 0.56% to USD 3,323.65, silver declined 0.79% to USD 33.16, and copper edged down 0.16% to USD 9,557.35. Meanwhile, Brent crude rose 0.41% to USD 63.89 as markets reacted to shifting U.S. tariffs and a possible OPEC+ output increase.

Our Stance: Australian shares dipped today, led by declines in mining and energy stocks, following the US federal appeals court’s temporary reinstatement of Trump-era tariffs, which shook investor confidence and increased market volatility. Despite the S&P/ASX 200 closing May with a strong 3.8% rally supported by broad sector gains, economic signals remain mixed. ABS data reveals an 8.6% fall in industry profits and slowing retail turnover, reflecting ongoing inflationary pressures and weak global demand. Investors now await Australia’s Q1 GDP figures, crucial for guiding the Reserve Bank’s policy outlook. 

In its latest trading session, the S&P/ASX 200 Index advanced 24.90 points to close at 8,434.70, supported by a bullish candlestick formation and strong trading volumes both key indicators of sustained investor optimism and confidence. From a technical standpoint, the index continues to trade comfortably above its 21-period Simple Moving Average (SMA), reinforcing a positive near-term outlook. Attention now turns to a critical resistance level at 8,470.30. A decisive breakout above this threshold would likely signal a notable bullish shift, potentially improving market sentiment and opening the door for further upside gains. Looking at the broader trend, the index's continued position above the 50-period SMA on the weekly chart highlights its long-term bullish trajectory. This alignment supports the view that the prevailing uptrend remains intact. However, the key to sustaining this momentum will be the index’s ability to break and hold above the 8,470.30 resistance level. A confirmed move above this zone could act as a technical catalyst, triggering renewed buying interest and accelerating the current rally.