Markets Overview

  • ASX SPI 200 futures down 1.1% to 6,972.00
  • Dow Average down 1.9% to 33,233.77
  • Aussie down 0.2% to 0.7247 per US$
  • U.S. 10-year yield fell 11.9bps to 1.7071%
  • Australia 3-year bond yield rose 0.5bps to 1.55%
  • Australia 10-year bond yield rose 5bps to 2.19%
  • Gold spot up 1.6% to $1,940.39
  • Brent futures up 7.4% to $105.20/bbl

Economic Events

  • 11am: (AU) Australia to Sell A$300 Million 1.75% 2051 Bonds
  • 11:30am: (AU) 4Q GDP YoY, est. 4.1%, prior 3.9%
  • 11:30am: (AU) 4Q GDP SA QoQ, est. 3.5%, prior -1.9%

A surge in oil sent shivers through risky assets Tuesday, reversing an early recovery in American stocks and sending some European markets down 4%. Bonds rallied amid concern about the impact of war on global economies, with 10-year U.S. yields posting their worst four-day drop since December.

President Joe Biden is being pressured by lawmakers in both parties to cut off U.S. imports of Russian oil and gas. Such a move would likely send gasoline prices surging, adding to inflation pressures. Biden will deliver his State of the Union speech at 9 p.m. in Washington.

Meantime, Fed Chair Jerome Powell will try to reassure lawmakers this week that the central bank will act to curb the hottest inflation in four decades while remaining flexible in the face of geopolitical uncertainties. He’s set to testify in a semiannual monetary-policy testimony to House and Senate panels starting Wednesday.

Other News

The cargo ship that caught fire in the Atlantic while transporting roughly 4,000 Volkswagen AG vehicles to the U.S. has sunk despite efforts to tow it to safety.

The Felicity Ace sank 220 nautical miles off the coast of Portugal’s Azores Islands around 9 a.m. local time on Tuesday after being battered by waves and leaning 45 degrees to its starboard side, the ship’s operator said.

“The weather was pretty rough out there,” Pat Adamson, a spokesperson for MOL Ship Management (Singapore), a unit of Mitsui OSK Lines Ltd., said by phone. “And then she sank, which was a surprise.”

Volkswagen had VW, Porsche, Audi, Bentley and Lamborghini-branded models on the vessel, which was on its way to Rhode Island from Germany’s Emden port when the fire broke out on Feb. 16. The blaze is believed to have lasted more than a week after the Panama-flagged ship’s crew was evacuated and it was left adrift.

Tug boats and salvage craft accompanying the vehicle are in the area to monitor the situation, Adamson said.
“There doesn’t appear to be any oil pollution yet — they’re checking on that,” the spokesperson said.