Australian Sharemarket Dips as Investors Eye Next Market Catalyst

Image Source : Krish Capital Pty Ltd

Index Update: The S&P/ASX 200 edged down slightly on Thursday, slipping 2.90 points to close at 8,538.90—just below its recent high. The mild decline followed a flat session on Wall Street, where investors responded cautiously to an unexpected contraction in the US non-manufacturing sector—the first in a year—sparking speculation of at least two potential interest rate cuts by the Federal Reserve. Despite the dip, the ASX 200 has risen 1.54% over the past five days and now sits only 0.89% below its 52-week high.

Out of the eleven sectors, four finished in positive territory. Information Technology led the gains, climbing 0.71% for the day and 1.09% over the week.

Macro Update: The Australian dollar rose above 65 US cents, supported by a weaker US dollar against other major currencies. This gain in the local currency came after softer-than-expected domestic economic data, which heightened speculation that the Reserve Bank of Australia (RBA) might consider a rate cut as early as July. Data released by the Australian Bureau of Statistics (ABS) on 5 June 2025 revealed a decline in the nation’s trade surplus. In April, the seasonally adjusted goods balance fell by AUD 1.48 billion, with export values dropping 2.4%—largely due to a decrease in non-monetary gold exports. At the same time, import values increased by 1.1%, driven mainly by higher imports of capital goods.

Top Market Movers: The top performers on the ASX were Mineral Resources Ltd (ASX: MIN), which jumped 14.80% to close at AUD 23.19, followed by Lynas Rare Earths Ltd (ASX: LYC), gaining 12.52% to AUD 9.26, and Pilbara Minerals Ltd (ASX: PLS), up 12.50% to AUD 1.35. On the downside, IDP Education Ltd (ASX: IEL) led the losses, falling 6.35% to AUD 3.54, while Healius Ltd (ASX: HLS) declined 4.60% to AUD 0.83, and Capricorn Metals Ltd (ASX: CMM) dropped 4.08% to AUD 9.64.

Commodity Update: The dollar hovered near six-week lows on Thursday after weak U.S. data fuelled fears of slow growth and persistent inflation. The euro remained steady ahead of an expected ECB rate cut. Gold dipped 0.10% to $3,395.95. Silver rose 0.11% to $34.74 per ounce, and copper gained 0.17% to $9,649 per metric ton. Brent crude slipped 0.30% to $64.65 amid rising U.S. fuel stocks and Saudi price cuts for Asia.

Our Stance: The S&P/ASX 200 dipped slightly on Thursday, easing 0.03% to sit just below its recent high, as investor caution persisted in the wake of disappointing U.S. services sector data. Speculation over possible interest rate cuts by both the Federal Reserve and the RBA kept market sentiment subdued. April economic data showed only a marginal rise in household spending and a softening trade balance, adding to the cautious tone. However, a stronger Australian dollar and gains in technology stocks provided some support to the index. Commodity markets were mixed, with modest movements in gold and oil reflecting continued global uncertainty.

The S&P/ASX 200 index experienced a subdued trading session, slipping by 2.90 points and forming a small bearish candlestick pattern, accompanied by a rise in trading volume indicating cautious sentiment among market participants. Despite this minor pullback, the index continues to trade above its 50-period Simple Moving Average (SMA), which serves as a critical support level. On the daily chart, key support is noted around 8,615.40 a level that remains essential for preserving the current bullish structure. Holding above this zone may reinforce recent gains and encourage continued buying interest. Additionally, the index is positioned above the 21-period simple moving average (SMA) on the weekly chart, signalling longer-term strength and potential for sustained upward momentum. This confluence of support across both daily and weekly timeframes suggests that the index remains well-positioned to withstand short-term volatility and maintain its broader uptrend.