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Wall Street closed higher on Tuesday across the key indices amid a decline in treasury yields and ahead of key jobs data out on Friday. The Dow Jones rose 0.36%, the S&P500 added 0.15% and the tech-heavy Nasdaq climbed 0.17% on Tuesday. Investors are eagerly awaiting the release of key nonfarm payrolls data out on Friday for the month of May with hopes of an ease in the number of people currently employed in the US to support the Fed’s interest rate cut outlook, but not a major decline as that would spark recession fears.

In Europe overnight, markets closed lower across the region as investors await the European Central Bank’s rate decision out on Thursday to see if the inflation print for the region that came in hotter-than-expected last Friday, deters the ECB from cutting rates as is widely expected. The STOXX600 fell 0.5% as mining stocks weighed on the bourse, while Germany’s DAX fell 1.09%, the French CAC lost 0.75% and, in the UK, the FTSE100 ended the day down 0.37%.

Across the Asia markets on Tuesday, India’s stock market tumbled 5% as the country continued voting for its 2024 election, while Hong Kong’s Hang Seng rose 0.12% on Tuesday, South Korea’s Kospi index shed 0.76% and Japan’s Nikkei ended the day down 0.22%.

Weakened commodity prices and a mixed session in the US on Monday caused the ASX to reverse Monday’s gains to post a 0.31% decline on Tuesday. A sharp slide energy stocks weighed on the local bourse following the 3.75% drop in the price of oil on Tuesday as the markets digested OPEC+’s further production cut announcement, while financials stocks closed 0.23% higher to offset some of the heavy losses.

A positive crop outlook forecast from the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) fuelled a rally for some agriculture stocks yesterday including GrainCorp which climbed 4.8%. The report detailed national winter crop production is set to increase to 51.3m tonnes which is a 9% increase on the last financial year.

Gold miners also climbed again on Tuesday amid a rise in the price of the precious commodity driven by rate cut outlook in the US.

The declining price of iron ore on weakened Chinese property sector outlook hit the local iron ore miners yesterday with BHP sliding 1.18%, while Fortescue fell 1.86% and Champion Iron tumbled 5.2%.

What to watch today:

• All eyes locally will be on the release of Australia’s GDP growth rate data for Q1 which is released today at 11:30am with economists expecting a second consecutive reading of 0.2% growth, which would reflect softer economic growth. Australia’s trade balance data for April is also out on Thursday with the forecast of the country’s trade surplus to improve slightly to $5.5bn from $5.024bn in March.
• On the commodities front this morning oil is trading a further 1.78% lower at US$72.89/barrel, gold is down just over 1% at US$2326.86/ounce and iron ore is down a steep 6.31% at US$110.10/tonne.
• The Aussie dollar has slightly weakened overnight to buy 66 US cents, 102.88 Japanese Yen, 51.98 British Pence and 1 New Zealand dollar and 8 cents.
• Ahead of the midweek trading session here in Australia the SPI futures are anticipating the ASX to open the day down just 0.06%.

Trading Ideas:

• Bell Potter has maintained a buy rating on GrainCorp (ASX:GNC) and raised the 12-month price target from $9.50 to $9.90 following the release of the ABARE June east crop forecast report surprising to the upside. The ABARE forecast implies another strong cropping outcome for GrainCorp in FY25 with the initial June forecast implying the fifth largest crop on record.
• Bell Potter has maintained a hold rating on Synlait Milk (ASX:SM1) and decreased the 12-month price target from $0.66 to $0.47 after the milk processing company released a further FY24 update downgrading FY24 EBITDA expectations to the lower end of guidance reflecting lower ingredients values and inventory impairments.