ASX set for flat morning trade as 2025 winds down

The Australian sharemarket is set for a muted start on the last day of the year after US stocks wavered in light trading, with investors assessing minutes of the Federal Reserve’s December meeting as 2025 nudges to the finish line.

ASX futures were up 1 point to 8708 as of 7.07am AEDT, following two days of modest declines in light holiday trading. The S&P/ASX 200 is on track for a 6.3 per cent gain for the year - its worst since its loss in 2022, and below the performance of the stock markets of most other developed countries. The Australian dollar was trading at US66.96¢ as of 7.19am AEDT.

Wall Street’s S&P500 index has gained more than 17 per cent rise this year, while similar indices for the UK, Japan, Germany, Canada and Hong Kong were all on pace for gains of more than 20 per cent, as was the global benchmark known as the MSCI World Index. One of the few markets the ASX200 was set to outperform was New Zealand’s, where the NZ50 was up an anaemic 3.1 per cent.

Wall Street had a relatively quiet session as the year comes to a close.Credit: Bloomberg

The ASX will finish trading early on Wednesday, closing at 2.10pm AEDT for New Year’s Eve, and will remain closed on New Year’s Day.

On Wall Street overnight, the S&P 500 was flat in afternoon trade. The Dow Jones Industrial Average and the Nasdaq composite were both down 0.2 per cent. Silver and gold bounced back after plunging from all-time highs.

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Apart from the release of the Fed’s meeting minutes, which showed most officials see additional interest rate cuts as appropriate if inflation declines over time as expected, there has generally been a lack of major catalysts to move markets this week, especially as news flow and trading volumes have been muted.

The record of the US central bank’s most recent meeting highlighted the divisions among its officials and how difficult it was for them to lower rates by a quarter percentage point earlier this month. Some Fed officials made it clear they believe rates should remain on hold “for some time” after the December gathering.

“A few of those who supported lowering the policy rate at this meeting indicated that the decision was finely balanced or that they could have supported keeping the target range unchanged,” the minutes said.

What the equity market needs next year is a dovish US central bank, Amanda Agati, PNC Asset Management Group’s chief investment officer said on Bloomberg Television on Tuesday.

“I joke that the equity market is like a kid in a candy store, braving a sugar high for more policy accommodation, a more dovish Fed — but it doesn’t know what’s good for it,” she said. “The bond market is the adult in the room taking away the last lollipop.”

The biggest weights on the US market remained technology companies, especially those focused on advancements for artificial intelligence. Nvidia edged down 0.2 per cent and Apple fell 0.5 per cent. Both companies have outsized values that have a greater overall impact on the market’s broader direction.

On the winning side, Facebook parent Meta Platforms rose 1.9 per cent. The company is buying artificial intelligence startup Manus as it continues an aggressive push to amp up AI offerings across its platforms. The California tech giant declined to disclose financial details of the acquisition. But The Wall Street Journal reported that Meta closed the deal at more than $US2 billion ($3 billion).

Markets were mixed in Asia and higher in Europe.

With just two trading days left before the year ends, most big investors have closed out their positions and volume has been thin. Wall Street will also be closed on Thursday for New Year’s day.

The more notable action was again in the commodities markets. Gold, silver and copper all resumed their ascent after steep declines a day earlier.

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The price of gold rose 1.1 per cent and silver prices jumped 9.5 per cent after slumping on Monday when the Chicago Mercantile Exchange, one of the largest trading floors for commodities, asked traders to put up more cash to make bets on precious metals. Prices for both metals have surged in 2025 on a mix of economic worries and supply deficits.

Copper rose 3.7 per cent and is up more 40 per cent for the year on strong demand. The base metal is critical to global energy infrastructure, and demand is expected to keep growing as the development of artificial intelligence technology puts more of a strain on data centres and the energy grid.

Crude oil prices were relatively steady. The price of US crude oil was mostly unchanged. The price of Brent crude, the international standard, fell 0.1 per cent.

Treasury yields mostly rose in the bond market. The yield on the 10-year Treasury rose to 4.12 per cent from 4.11 per cent late on Monday. The yield on the two-year Treasury, which moves more closely with expectations for what the Federal Reserve will do, held steady at 3.45 per cent.

Overall, bond yields have fallen significantly through the year, partly because of the market’s expectations for a shift in interest rate policy at the Fed. The central bank cut interest rates three times late in 2025, most recently at this month’s meeting.

AP, with AAP and Bloomberg

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