Dreary consumer sentiment set to be put to the test
Australian consumers are preparing for their monthly check-in amid below-average confidence.
Sentiment waned as oil prices rose in the early stages of the conflict in the Middle East, as shown in Westpac-Melbourne Institute surveys published every four weeks.
The July edition, scheduled for Tuesday, will come as consumers remain stubbornly pessimistic despite a modest decline in prices at the pump.
Drivers currently pay roughly $1.60 per liter; This is well below the $2 or more per liter paid in March and April.
Despite the serious escalation of hostilities between the United States and Iran, the energy crisis has shown some resilience; Oil volumes continue to pass through the Strait of Hormuz at approximately 20 percent of pre-war levels, as well as alternative pipeline diversions.
The latest round of strikes kept oil volatile but generally in the $70 to $90 per barrel range.
AMP economist My Bui said the US-Iran dispute is starting to resemble the tariff saga in 2025, with markets getting used to repeated increases and pullbacks.
“Prices are unlikely to rise much above $90 per barrel because higher fuel prices would put political pressure on Republicans, possibly leading to another Trump retreat like we saw in May,” he wrote in a note.
Beyond oil, consumers are weighing in on broader pressures: still-high domestic core inflation, a weakening housing market and stalled productivity growth.
At the same time, the job market remains historically tight.
Consumer confidence can indicate a willingness to spend; Weak sentiment generally leads to slower economic growth and less inflationary pressure.
In a week otherwise devoid of major economic data and communications from the Reserve Bank of Australia, National Australia Bank’s business survey will be another standout.
Also expected on Tuesday is sentiment to trend downward as businesses react negatively to both the Middle East conflict and the federal government policies announced in the May budget.
Meanwhile, Wall Street investors are distracted by optimism about memory chip makers and expectations for a quarterly earnings season.
Eight of the 11 S&P 500 sector indexes rose 1.65 percent on Friday, led by information technology, while there was a 1.46 percent increase in consumer preferences.
Nasdaq increased by 0.29 percent to 26,281.61 points, and the Dow Jones Industrial Average increased by 0.29 percent to 52,637.01 points.
Australian share futures rose 43 points, or 0.49 percent, to 7,073.
The S&P/ASX200 rose 43.5 points, or 0.5 percent, to 8,806 points on Friday, while the All Ordinaries index rose 42.4 points, or 0.47 percent, to 9,003.7 points.
