Markets Overview

  • ASX SPI 200 futures down 0.9% to 7,059.00
  • Dow Average down 0.1% to 33,840.78
  • Aussie up 0.4% to 0.7324 per US$
  • U.S. 10-year yield fell 3.5bps to 1.8439%
  • Australia 3-year bond yield rose 10bps to 1.55%
  • Australia 10-year bond yield rose 9bps to 2.17%
  • Gold spot up 0.3% to $1,935.24
  • Brent futures down 2.3% to $110.29/bbl

Economic Events

  • 11am: (AU) Australia to Sell A$1 Billion 1.5% 2031 Bonds

Technology stocks dragged down the equity market ahead of Friday’s jobs report as traders weighed the economic impacts of the war in Ukraine. The rally in oil eased, with crude experiencing an extraordinary run of volatility.

The S&P 500 erased gains, while the tech-heavy Nasdaq 100 underperformed major benchmarks as megacaps Tesla Inc. and Inc. sank at least 2.7%. West Texas Intermediate topped $116 before pulling back. Zinc reached its highest since 2007 and aluminum jumped to a record as industrial metals extended a surge fueled by trade turmoil and the increasing economic isolation of Russia.

Traders awaited the government’s employment report, which is currently forecast to show the U.S. added 415,000 jobs in February. Rapid wage growth in the U.S. likely isn’t retreating any time soon. Along with soaring commodities prices since Russia’s invasion of Ukraine, high labor costs are yet another factor the Federal Reserve will have to contend with as it prepares to raise interest rates to tamp down inflation.

Fed Chair Jerome Powell said the surge in energy prices will likely spill into inflation and if that shift proved to be lasting, it could put upward pressure at the “margin” to longer-term expectations that the central bank wants to stop creeping up. He also noted the conflict in Ukraine could hit sentiment, harming investment spending.

Other News

The mood in China’s credit market is such that a poem depicting the frailty of humans against cosmic forces has gone viral.

Traders circulated a screenshot Thursday of the bleak poem purportedly posted on WeChat by an official at Logan Group Co. The builder was once seen as one of China’s stronger developers but concern about its financial health has grown this year, and its local notes slid to record lows Thursday.

“A hero is no longer free after losing his luck,” goes a line in the poem by Luo Yin, who wrote in the late Tang Dynasty over a thousand years ago.

Logan’s bonds have certainly had a tough streak of late. Its yuan note due 2024 fell 6.9% to 38.6 yuan Thursday, while its securities due 2022 dropped 6.1% to 38.5 yuan, both closing at their lowest ever, Bloomberg-compiled prices show.

Logan didn’t immediately respond to a request seeking comment. The selloff spilled over to some of Logan’s dollar notes, with its bond due 2023 falling 1.7 cents on the dollar to 27.6 cents, a record low.
Transparency worries have plagued the firm as investors struggle to understand the scope of its liabilities.

Disclosures about its private debt arrangements prompted Fitch Ratings to downgrade the developer’s credit rating in February. Moody’s Investors Service followed suit shortly after citing concern over its governance practices.