Markets Overview
- ASX SPI 200 futures up 0.6% to 8,420.00
- Dow Average down 0.3% to 42,677.24
- Aussie down 0.5% to 0.6424 per US$
- US 10-year yield rose 3.7bps to 4.4850%
- Australia 3-year bond yield fell 17 bps to 3.47%
- Australia 10-year bond yield fell 12 bps to 4.40%
- Gold spot up 1.9% to $3,290.21
- Brent futures up 0.2% to $65.64/bbl
Economic Events
- 10:30: (AU) April Westpac Leading Index MoM, prior -0.11%
- 11:00: (AU) Australia to Sell A$1.2 Billion 4.25% 2035 Bonds
Oil jumped and US stock-index futures dipped after a CNN report that US intelligence suggested Israel is making preparations for a possible strike on Iranian nuclear facilities.
West Texas Intermediate surged as much as 3.5% to $64.19 a barrel. It is not clear that Israeli leaders had made a final decision to carry out the strikes, CNN said, citing unnamed officials. Contracts for the S&P 500 slipped 0.2% in early Asian trading while those for the Nasdaq 100 fell 0.3%.
On Tuesday, the S&P 500 lost steam after gaining more than 5% over the previous six sessions. A slide in its most-influential group — big tech — weighed on trading. Tesla Inc. was the only megacap to gain as Elon Musk said he’s committed to leading the electric-vehicle giant five years from now.
Geopolitical tensions may add headwinds to markets, which had calmed recently after month of turmoil from the tariff blitz unleashed by US President Donald Trump. Still, investors are scouring charts for clues on whether the advances in stocks can persist, with the S&P 500 gauge near levels that some technicians view as a sign of overheating.
“There is little question that the momentum in the equity market is quite strong. That said, the market is getting overbought near-term, so it could see a breather at any time,” said Matt Maley at Miller Tabak. “However, unless that breather turns out to be a serious reversal, a retest of those all-time highs soon is very possible.”
Long-term Treasury yields climbed as fractious US budget negotiations kept focus on the growth in deficit spending, with traders piling into bets that they will surge further. President Donald Trump is growing frustrated with demands to significantly boost the cap on the state and local tax deduction, according to a senior administration official, signaling a deadlock as Republicans aim to quickly pass a giant tax-cut bill.
Fed Reserve Bank of St. Louis President Alberto Musalem said tariffs will likely weigh on the US economy and weaken the labor market. Musalem said the Fed can deliver a “balanced response” to both inflation and employment as long as Americans’ outlook on future prices remains anchored at the central bank’s 2% target.
The bond-market revolt against Washington’s fiscal largess is far from over, according to Garda Capital Partners’ Tim Magnusson, who says a rapid increase in yields is likely the only thing that will motivate Congress to rein in the deficit.
“The bond market is going to have the final say on what happens fiscally,” Magnusson said in an interview at the firm’s New York office. Lawmakers “are going to get tested more — 5% is not the final line in the sand.”
In other commodities, gold rose on Tuesday while a rally in Bitcoin stalled just shy of the record high set on Jan. 20, when Trump was inaugurated.
