ASX Market Outlook: Pre-Open Brief 21.03.2025 - Futures, Stocks and Key Events
ASX Stock Market Outlook
The ASX 200 is set for a sluggish start, with futures down 0.21% after a choppy Wall Street session. The market is caught between Fed rate cut hopes, trade war fears, and weak employment data. Yesterday, the local market surged 1.2%—its best day in six weeks—driven by optimism around US rate cuts and stronger consumer sentiment. However, that momentum looks shaky today as reality sets in. The Fed is in no rush to cut rates, and traders hoping for a move in June might be waiting a while. Meanwhile, US trade tensions are heating up, and Trump’s tariff plans remain a wildcard.
Gold prices are holding steady, but tailwinds persist. Tech stocks, which ripped higher yesterday, may face profit-taking today, while gold miners will continue to get a lot of attention. Energy stocks could benefit from oil’s strong performance, but broader market sentiment remains cautious.
Overnight Wrap: Equities, Bonds, Commodities and Currencies
Wall Street struggled for direction overnight as traders braced for today’s $4.5 trillion "triple witching" options expiry event, which historically adds to market volatility. The S&P 500 slipped 0.24%, while the Dow Jones is nearly flat, down just 0.05%. The Nasdaq 100 lost 0.27%, weighed down by mixed performances in the tech sector. Apple fell, while Nvidia managed to hold firm.
Despite strong existing home sales data boosting confidence in the housing sector, broader sentiment remains fragile. Bond yields held steady, with the US 10-year yield sitting at 4.24%, while the US dollar strengthened 0.3%, pushing the Australian dollar down to US$0.6305. Investors are still digesting the Federal Reserve’s cautious stance, which left rates unchanged and maintained expectations for two rate cuts later this year. However, the timing of those cuts is now in question, with some expectations now being pushed back.
In Europe, the rally stalled as concerns over US tariffs weighed on sentiment. The Stoxx 600 fell 0.63%, while the FTSE 100 was flat after the Bank of England kept rates steady. The Swiss National Bank cut rates in an effort to stem capital inflows. European Central Bank officials warned that new US tariffs could slow regional growth, adding to market uncertainty.
The Play Today: How to Trade the ASX Open
With ASX futures pointing lower, traders should brace for a mixed session. Gold stocks will be in focus as prices remain flat, but long-term upside remains.
Tech stocks, which led yesterday’s rally, could see some profit-taking. WiseTech (ASX:WTC) and TechnologyOne (ASX:TNE) surged in the previous session, but given the weakness in US tech overnight, investors may take some money off the table. Meanwhile, energy stocks are expected to benefit from oil’s rise overnight.
Mining stocks could struggle, with iron ore stuck at US$100.45 per tonne. On the other hand, banks and property stocks could hold up well, given growing expectations for an RBA rate cut. Market pricing now reflects a 78% chance of a rate cut in May.
Overall, today’s session could see a rotation into defensives, with gold and energy names holding up better than high-multiple growth stocks.
Major Themes Driving the Financial Markets:
Federal Reserve's Stance: The Fed's hold decision has created more uncertainty. There’s still two potential cuts this year. but market is now doubting that as well. With a raft of chaos happening with tariffs and wars, rate cuts were one of the few positives the markets had to look forward to. Now that’s in question.
Trade Tensions and Tariffs: The Trump administration's tariff policies continue to inject volatility into global markets. The potential for higher inflation and slower growth—stagflation—remains a concern.
Tech Sector Dynamics: Significant movements in major tech stocks, particularly companies like Tesla and Alphabet, highlight the sector's sensitivity to broader economic indicators and policy decisions. Investors should monitor these developments closely.
Economic Data to Watch this Week:
Monday 17th:
Chinese industrial production 5.9% vs 5.3% expected
Chinese retail sales 4.0% vs 3.8% expected
US retail sales 0.2% vs 0.6% expected
Tuesday 18th:
Australia’s Sarah Hunter of the RBA to speak at the Australian Financial Review Banking Summit
Canadian CPI 1.1% vs 0.6% expected
US import prices 0.4% vs -0.1% expected
Wednesday 19th:
Japanese BOJ interest rates maintained at <0.5%
Thursday 20th:
US FOMC interest rates maintained at 4.5%
Australian unemployment rate 4.1% in line with expectations
UK interest rates held steady
Friday 21st:
Japanese CPI
Global Market Prices
Global Markets(Source: TradingView)
ASX Sector Information Technology
IT has been one of the hardest-hit sectors. It now shows signs of a potential bounce on the way. It’s one to watch today.
ASX Information Technology (XIJ) sector index (Source: TradingView)
ASX Stock to Watch: Droneshielc (ASX:DRO)
Droneshield's ramp up continues.
ASX Stocks to Watch (Source: TradingView)
ASX Stock to Watch: Duratec (ASX:DUR)
Duratec appears to be continuing its upward channel after some shakiness. Will this swing up take the stock to new highs?
ASX Stocks to Watch (Source: TradingView)
The Daily Brief is prepared in partnership with Vitti Capital.
