Local sharemarket unlikely to follow Wall Street lead as CPI data and Trump tariff deadline loom

Wall Street ended the week on a fresh high but Australian investors remain cautious with the release of inflation data this week and US President Donald Trump’s Friday tariff deadline.

Wall Street stock indices ending at fresh records on Friday. Picture: Getty Images

Australian investors remain cautious with the release of inflation data this week and US President Donald Trump’s Friday tariff deadline.

Wall Street stock indices ending at fresh records on Friday, but Australian shares are expected to open lower on Monday with ASX futures indicating the S&P/ASX 200 will ease 0.1 per cent.

“The S&P was up 0.4 per cent, the NASDAQ was up 0.2 per cent, the Dow was up 0.5 per cent. So normally that would point to a rise here, but our market has been trading a bit cautiously the last few days,” AMP chief economist Shane Oliver said. “The ASX futures … suggests a fairly soft open. And there are a bunch of balls in the air this week.”

Any news about deals on Mr Trump’s tariffs is likely to affect local markets, Dr Oliver said.

“He said he’s going to send letters to multiple countries imposing a tariff rate between 15 and 50 per cent,” he said. “I think the market’s been celebrating in the last week or so because deals have been signed or agreed on. That’s provided markets with a bit of comfort that maybe we won’t get the worst-case scenario.”

US President Donald Trump with Federal Reserve chair Jerome Powell last week. Picture: AFP

The European Union has said a deal with Mr Trump is “within reach”, after the US President threatened to impose a 30 per cent tariff on imports.

As well, Japan secured a deal with Mr Trump last week, promising to invest $550bn in the US while also securing a 15 per cent reciprocal tariff. But Mr Trump has cautioned that striking a deal to by the August 1 deadline with the EU will be a challenge.

“I would say that we have a 50/50 chance, maybe less than that, but a 50/50 chance of making a deal with the EU,” Mr Trump told reporters on Friday, but investors have adopted an optimistic stance about further accords given his record of suspending or delaying the most onerous tariffs. The S&P 500 finished at a fifth straight record and the tech-rich Nasdaq at a third straight record, capping an upbeat week.

Mr Trump also encouraged investors with his comments about private talks with Fed Reserve chair Jerome Powell, after the pair clashed during a rare presidential visit to the US central bank last week. He told reporters he had “a very good meeting on interest rates” with Mr Powell. Mr Trump wants rates lowered immediately to help the US economy. But the Fed is widely expected to leave its benchmark interest rate in the range of 4.25 per cent to 4.5 per cent at the conclusion of a two-day policy meeting this week.

Investors have also greeted generally benign data that suggest the US economy is on solid ground, said Angelo Kourkafas of broking house Edward Jones.

“That might change in the months ahead, but for now, we have an economy that is holding up,” Mr Kourkafas said.

On the local bourse, Dr Oliver said traders will closely watch Wednesday’s quarterly consumer price index figures. The trimmed mean CPI – the RBA’s preferred measure of underlying inflation – was 2.4 per cent in May, and the June figure will be key in determining whether the official cash rate is cut next month. Dr Oliver said the market consensus is for a trimmed mean of 2.7 per cent.

“If it’s something like 2.9 per cent, as it was in the March quarter … then that could call into question a cut in August,” he said.

Additional reporting: The Times and AFP

Originally published as Local sharemarket unlikely to follow Wall Street lead as CPI data and Trump tariff deadline loom