Markets Overview

  • ASX SPI 200 futures little changed at 7,266.00
  • Dow Average down 0.2% to 33,618.69
  • Aussie up 0.5% to 0.6781 per US$
  • U.S. 10-year yield rose 6.9bps to 3.5072%
  • Australia 3-year bond yield rose 11 bps to 3.07%
  • Australia 10-year bond yield rose 8 bps to 3.40%
  • Gold spot up 0.2% to $2,021.46
  • Brent futures up 1.8% to $76.62/bbl

Economic Events

  • 09:00: (AU) April CBA Household Spending YoY, prior 3.8%
  • 09:00: (AU) April CBA Household Spending MoM, prior 8.0%
  • 10:30: (AU) May Westpac Consumer Conf SA MoM, prior 9.4%
  • 10:30: (AU) May Westpac Consumer Conf Index, prior 85.8
  • 11:00: (AU) Australia to Sell A$150 Million 0.75% 2027 Linkers
  • 11:30: (AU) 1Q Retail Sales Ex Inflation QoQ, est. -0.6%, prior -0.2%
  • 19:30: (AU) Australia-Budget

Australia is headed for its first budget surplus since 2008 as windfall tax revenue from a fully employed economy and elevated commodity export prices combine to swell the government’s coffers.

US equities eked out a small gain Monday while Treasuries fell as investors weighed what it would take to finally reverse the Federal Reserve’s path on rates after a survey of loan demand showed signs of credit tightening.

The S&P 500 ended the day little changed after wavering between gains and losses in a subdued session Monday. The gauge had jumped 1.9% Friday to halt its longest losing streak since February. The tech-heavy Nasdaq 100 advanced 0.2% as AI-capable chipmakers Advanced Micro Devices Inc. and Nvidia Corp. rose alongside Google-parent Alphabet Inc.

A gauge of the dollar erased losses after the Fed’s Senior Loan Officer Opinion Survey signaled that the credit market was tightening slightly while business loan demand was weakening. The yield on the policy sensitive two-year Treasury rose to 4.01%. Syndicate desks brace for as much as $35 billion pf corporate bond sales volume this week while Apple Inc. kicked off a $5.25 billion sale.

Other News

Never mind the auto industry’s relentless push toward electrification, Chery Automobile Co. is the latest Chinese carmaker trying to win over Australians with gasoline-powered SUVs pitched at the lower end of the market.

Chery’s mid-size Omoda 5 is selling across Australia for as little as A$32,000 ($22,000) for the base model. A colleague and I drove a high-end version around Sydney for four days. It’s stuffed with extras you’d normally find in luxury cars — think heated steering wheel and exterior puddle lights — and costs not much more than A$35,000.

Australia’s best-selling car, Ford Motor Co.’s Ranger pickup, can go for more than double that price.

Wuhu-based Chery joins Chinese rivals Great Wall Motor Co. and SAIC Motor Corp. — owner of the MG brand — in pouring relatively affordable cars into an Australian market that’s been slow to turn to electric vehicles. Chery was China’s second-biggest car exporter worldwide last year.

With inflation in Australia still untamed by almost a dozen interest-rate hikes, Chery’s Omoda is a clear pitch on price in a market famed for its love of SUVs and pickups. Sales of vehicles sourced from China have increased 69% in Australia. And there are more to come: Chery aims to start selling its larger Tiggo 7 Pro and Tiggo 8 Pro SUVs later this year.

Australia’s best-selling Ford Ranger starts at around A$50,000 and pushes close to A$100,000 at the top end. The country’s next-best sellers are Toyota Motor Corp.’s Hi-Lux pickup and its mid-sized SUV, the RAV4.

To some degree, the Omoda and other cars in a similar price bracket are also a test of Australia’s willingness to switch to electric vehicles.
EVs accounted for 8% of Australia’s new car sales in April, up from just 1.1% a year earlier, according to the Federal Chamber of Automotive Industries. While an improvement, the country still trails way behind market leaders like China, where almost one-in-four new car sales are electric.

Two of the main roadblocks in Australia are price (a new Tesla Model 3 costs A$61,300 in Sydney, for example), and a lack of choices — though government plans to introduce tougher emissions standards may soon encourage global automakers to offer more EVs here.

How did the Omoda 5 stack up in the flesh?

The car’s technology, at least in the better-equipped EX model, appears to punch above its weight. There’s a powered passenger seat and tailgate, heated front seats and an electric sunroof.

Most startling of all, a 360-degree camera system can beam onto the driver’s display a semi-translucent image of the vehicle, as if you were looking at it from outside. The trick reminded me a little of James Bond’s much-ridiculed “invisible” Aston Martin in the 2002 movie, Die Another Day.

While the Omoda drives nicely and the red exterior trim gives it a sporty appearance, it risks claiming a victory of form over function. Puddle lights that beam “Omoda” on the ground next to the car have limited utility in the world’s driest continent after Antarctica.

The car’s all-round vision, using the human eye at least, is particularly unmemorable. My colleague remarked that looking into the rear-view mirror was like peering down the wrong end of a telescope. Maybe you do get what you pay for, but for people chasing luxury stylings at budget prices, the Chery may be worth a drive.