Markets Overview

  • ASX SPI 200 futures up 0.3% to 6,597.00
  • Dow Average down 0.1% to 31,338.15
  • Aussie up 0.1% to 0.6845 per US$
  • U.S. 10-year yield rose 8.5bps to 3.0803%
  • Australia 3-year bond yield rose 4bps to 2.96%
  • Australia 10-year bond yield rose 1bp to 3.48%
  • Gold spot up 0.1% to $1,742.48
  • Brent futures up 2.3% to $107.02/bbl

Economic Events

Stocks in Asia look set for a cautious start on Monday amid fresh concerns about the possibility of more growth-sapping Covid curbs in China that could weigh on the global economic outlook.

Futures rose for Japan and Australia but were little changed for Hong Kong, where casino shares face a challenging open after Macau announced the closure of almost all business for a week from Monday due to a virus outbreak.

US equity contracts slipped following a weekly gain for global equities. The dollar was mixed against major peers in early trading while crude oil fell.

Financial hub Shanghai reported its first case of the highly infectious BA.5 omicron sub-variant Sunday and warned of “very high” risks, stoking fears of more lockdowns given that China remains wedded to stamping out the virus. Beijing has also pledged efforts to shore up the economy.

Threats from high inflation and slowing economic expansion continue to shadow markets. A solid US employment report Friday eased some recession fears and stiffened expectations of more Federal Reserve monetary tightening.

That cemented a drop in Treasuries, leaving the US 10-year yield above 3% but below the 2-year yield. The inversions in yield curve are a potential sign of economic retrenchment ahead.

An inflation reading due from the US later this week is expected to get closer to 9%, a fresh four-decade high, buttressing the Fed’s case for a jumbo July rate hike. Company earnings reports, meanwhile, will shed light on recession fears that contributed to an $18 trillion first-half wipeout in global equities.

The consumer-price index data will be “the core driver of risk this week” and a 9% print is possible, which “should keep US bond yields headed higher,” Chris Weston, head of research at Pepperstone Group, wrote in a note.

Other News

Emmanuel Macron went to extraordinary lengths to support Uber’s lobbying campaign to help it disrupt France’s closed-shop taxi industry, even telling the tech company he had brokered a secret “deal” with its opponents in the French cabinet.

Leaked files including text message exchanges between Uber executives and Macron reveal how the cab-hailing business identified him as a key ally when he was economy minister and turned to him to help it behind the scenes.

The files suggest pro-business Macron, who was re-elected French president in April, was close enough to Uber’s managers during his two years in the economy ministry from 2014-16 for them not to think twice about contacting him for possible help when their premises were raided by tax and other authorities.

But most remarkably, the then 37-year-old ex-Rothschild banker told Uber he had cut a deal favourable to Uber with a bitterly divided Socialist government. It appears to have involved the Silicon Valley company closing down its most controversial unlicensed service in exchange for significantly lighter rules for another.

The messages paint a portrait of a politician who was, at least initially, exceptionally accommodating to Uber. “Thanks dear Travis,” the economy, industry and digital affairs minister wrote to the company’s co-founder Travis Kalanick in one late 2014 email exchange. “Let us keep in touch and progress together. Best, Emmanuel.”

The future president was seemingly shy about recording his in-person meetings with Kalanick in his public diary: of four revealed by the leak, only one, in Davos in January 2016, seems ever to have been made public. Behind the scenes, however, files suggest he and his aides were doing what they could to make life easier for Uber in France.

(The Guarding)