Local Markets Commentary

The Australian market is set to open little changed as a rise in the spot price of iron ore is offset by a fall in oil.

Supermarket owners and major retailers provided plenty of drag to the ASX yesterday, but it managed to close in the black after strong bank buying.

The market had closed before credit rating agency Moody’s has downgraded Australia’s big four banks.

Following Standard and Poor’s (S&P) decision to downgrade the credit ratings of 23 Australian financial institutions in May, Moody’s Investor Services has followed suit, lowering the ratings of 12 lenders on the back of what it describes as “elevated risks” in Australia’s household sector.

Unlike S&P, Moody’s decided to downgrade not only smaller lenders, but also Australia’s largest banks.

In overnight commodities trade, oil faltered, with the price of US oil falling below $US45 a barrel, amid renewed concerns that US output is set to continue to rise, negating efforts by OPEC to rein in global production and the lingering global glut.

Zinc prices touched a two-week high as expectations of stronger demand from steelmakers rose and inventories on the London Metal Exchange hit nine-year lows.

Copper prices closed up 1.2%, helped by news and data from China indicating stronger demand for the commodity used in construction and power.

The $A is trading at US76c.

Overseas Market Commentary

Wall Street advanced overnight, touching fresh highs, as some of the big techs rebounded after recent losses.

The Nasdaq 100 Index jumped the most since November, as large-cap tech stocks rebounded from two weeks of declines.

Apple surged nearly 3%, pacing some of the year's highest fliers - though the tech indexes remain about 2 per cent below records achieved earlier this month.

US Treasuries fell after New York Fed boss William Dudley said halting the tightening cycle now would imperil the US economy.

While uncertainty hangs over both UK leadership and the outlook for Brexit negotiations, in France stocks outperformed upbeat European indices on Monday following a convincing parliamentary victory for President Emmanuel Macron.

France's blue-chips gained nearly 1% after Macron cemented an overwhelming parliamentary majority, further increasing his party's capacity to push through reforms.

Banks BNP Paribas, Societe Generale and Credit Agricole underpinned gains on the index.

Asian shares climbed as Chinese companies advanced in Hong Kong and Shanghai ahead of MSCI Inc's decision expected on Tuesday on whether to add A-shares to its global indexes, while the weaker yen supported Japanese equities.

China Evergrande Group jumped 7.8% in Hong Kong as government data showed new home prices rising in 56 of 70 Chinese cities in May.

Foxconn Technology jumped 6% ahead of its AGM this week, following China Evergrande and Travelsky Technology's 8.6 per cent surge.