The key takeaways from the last 24 hours
Australian stocks in focus
Australian equities retreated ahead of the Reserve Bank of Australia’s expected rate cut, with the S&P/ASX 200 Index (ASX: XJO) slipping 0.6 per cent, snapping an eight-day winning streak. Profits were recycled into typically defensive utilities stocks and gold miners, buoyed by the higher bullion price. Gold miner Capricorn Metals Limited (ASX: CMM) was the best performer on the S&P/ASX 200 Index (ASX: XJO), rising 3.4 per cent to $8.71, while Evolution Mining Limited (ASX: EVN) rose 3.2 per cent to $8.12.
In corporate news, New Hope Corporation Limited (ASX: NHC) tumbled 7.1 per cent to $3.65 after downgrading its guidance for coal output and sales. Fellow coal miner Whitehaven Coal Limited (ASX: WHC) closed down 3.4 per cent at $5.37. Domino’s Pizza Enterprises Limited (ASX: DMP) lost 2.6 per cent, closing at $24.55, after announcing the chief of its Australia and New Zealand business, Kerri Hayman, would step down in August. Hearts and Minds Investments Limited (ASX: HM1) slipped 1.3 per cent to $3.06 after it announced chief executive Brett Jollie was stepping down after less than a year with the business. And Electro Optic Systems Holdings Limited (ASX: EOS) surged 14.7 per cent to $1.48 after announcing a new government-funded order worth about $53 million for its counter-drone remote weapons system to address “urgent operational requirements” in Europe.
US currency and policy backdrop
The US Dollar Index (DXY) fell by about 0.7 per cent to 100.1 on Monday, retreating further from the one-month highs reached last week, as growing concerns over the United States fiscal outlook triggered a shift away from dollar-denominated assets. On Friday, Moody’s Investors Service downgraded the US credit rating from Aaa to Aa1, citing rising government debt and a widening budget deficit. Fiscal concerns were further exacerbated by the approval of President Trump’s tax-cut legislation by a key congressional committee on Sunday. The bill includes hundreds of billions of dollars in new tax cuts without corresponding spending offsets. Despite criticism, the Trump administration argues the tax cuts will spur economic growth, boost revenues, and ultimately help narrow the deficit.
On the monetary policy front, markets continue to price in two rate cuts by the Federal Reserve (Fed) this year, with reductions anticipated in September and December.