Consumer Confidence Sinks at Home as SpaceX Lights Up Wall Street

More consequential for markets, the US delivered a jobs report that increased concerns for a US rate hike later this year. With the RBA and the US Federal Reserve both meeting next week, the data flow is starting to matter. And late this week, SpaceX prices what could be the largest IPO in stock market history.

Key Takeaways

• Consumer sentiment fell 2.9% to 80.6 in June, remaining deeply pessimistic, with household financial expectations hitting levels rarely seen in the survey's fifty-year history

• Business conditions held at 3 index points in May, while confidence rebounded from -24 to -14, an improvement on recent lows but still negative across every single industry

• The US added 172,000 jobs in May, more than double forecasts, cementing expectations that the Fed's next move is a hike rather than a cut — bond yields jumped and equities pulled back on the news

• SpaceX lists on the Nasdaq this Friday US time in what is set to be the largest IPO in history

Australian Sentiment: Consumer and Business remain pessimistic

Consumer sentiment fell 2.9% to 80.6 in June, giving back May's modest recovery and returning to levels that rank among the weakest in the survey's fifty-year history. The fuel price shock from the Middle East conflict continues to weigh on household budgets, and the medium-term economic outlook fell to a three-year low. House price expectations dropped sharply.

The NAB business survey echoed the theme. Conditions held at 3 index points for the second consecutive month, sitting below the long-run average. Confidence bounced 10 points to -14, but remains negative across every industry in the survey without exception. Capacity utilisation, a measure of how much a business is using up its potential productive capacity, slipped below 82% for the first time in over a year, consistent with an economy that is cooling rather than accelerating.

US Jobs: The Rate Hike Case Firms Up

The US economy added 172,000 jobs with the unemployment rate remaining at 4.3% in May. Over the past three months, added jobs have averaged close to 190,000 per month, well above where the trend had been sitting through most of last year.

With stronger labour market data, the probability of a rate increase by October is now above 50%, and the 10-year Treasury yield jumped above 4.5% while equities sold off on the news.

For Australian investors, a Federal Reserve moving toward tightening puts upward pressure on global bond markets and limits the breathing room available to the RBA, which meets next week on June 16, one day before the next Federal Reserve meeting. Neither central bank is expected to move, but the language out of both meetings will be carefully read.

SpaceX IPO: Scale Like Nothing Markets Have Seen

SpaceX is set to price on Thursday evening US time, Friday morning Australia time, targeting a $1.75 trillion valuation and a raise of approximately $75 billion — which would make it the largest IPO in stock market history. The company lists on the Nasdaq under the ticker SPCX.

There is no direct ASX listing, so the immediate impact on Australian investors is indirect. A strong debut would reinforce risk appetite broadly and benefit the tech and growth-adjacent names that have driven recent ASX outperformance. A weak open would add to the pressure already being felt from rising yields.

Major index providers are mixed on whether to include the stock in their index. At its current size, SpaceX would be one of the largest US companies, however usually indices require companies to be trading for a certain period of time and have met other criteria such as profitability. The S&P will not waive their profitability requirement for SpaceX inclusion (currently the company is not profitable), while Nasdaq and MSCI have flagged early inclusion, potentially as soon as ten days after listing.

Looking Ahead

US inflation this week is the most important number between now and the central bank meetings of next week. A surprise to the upside would harden the case for a Fed hike and likely send another wave of selling through bonds and equities globally, with flow-on effects for the ASX. The RBA on June 16 is expected to hold, but the tone of the statement matters. Australian employment data on June 25 will be the first meaningful domestic read after both decisions land.

What We're Keeping an Eye on

• US Inflation — June 10: The last major data point before both central bank meetings. An upside surprise sharpens the hike case and puts pressure on equities globally.

• SpaceX IPO — June 12: Listing Friday on Nasdaq under SPCX at a targeted $1.75 trillion valuation. The largest IPO in history — watch for sentiment effects in the days around listing.

• RBA Meeting — June 16: No move expected, but the post-meeting statement will be closely read for any shift in tone given the global rates environment.

• US FOMC Meeting — June 17: No move expected, but with a hike now more probable than a cut and a new Fed Chair at the helm, the press conference carries real weight.