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The ASX 200 closed marginally higher on Thursday, and as we enter the last trading day of May, the index is up +3.5% with only the utilities sector dragging the chain. Although it’s been a stellar month, yesterday’s performance was a touch disappointing considering the global tailwinds:
- Heavyweight AI player Nvidia (NVDA US) reported well after-market, with the stock advancing ~5%, helping the NASDAQ futures climb ~2% during our trading session.
- The US S&P 500 futures advanced ~1.7% on the NVDA news, plus the federal court knocking back President Donald Trump’s “reciprocal” tariffs – we’re sure there’s more to play out here.
The local market closed at a 3-month high yesterday, but the upside momentum has been waning. Although the “Certainty Trade” is still alive and kicking, it was again the energy sector that outperformed on the penultimate session for May, even after the NVDA news. As we enter the historically choppy month of June, we think a pullback is close at hand. However, we remain bullish in the second half of the year, so we would regard such a move as an opportunity to increase market exposure.
- We remain bullish towards local stocks, ultimately targeting a break of 8600, but consolidation between 8250 and 8450 feels likely.
Global stocks were mixed overnight, perhaps taking their lead from the underwhelming ASX. European bourses closed slightly lower, with the EURO STOXX 50 and UK FTSE both falling by 0.1%. In the US, after promising so much early on in the day, the S&P 500 closed up 0.4% and the tech-based NASDAQ 0.2%, although AI giant Nvidia (NVDA US) still closed up +3.3%.
- The SPI Futures are calling the ASX200 to open down 0.3% after Wall Street failed to deliver on early promise.
