Markets Overview

  • ASX SPI 200 futures down 0.2% to 7,248.00
  • Dow Average little changed at 33,531.33
  • Aussie up 0.3% to 0.6779 per US$
  • U.S. 10-year yield fell 7.9bps to 3.4388%
  • Australia 3-year bond yield rose 3 bps to 3.13%
  • Australia 10-year bond yield rose 0.5 bps to 3.45%
  • Gold spot down 0.2% to $2,029.90
  • Brent futures down 1.0% to $76.65/bbl

Economic Events

  • 10:30: (AU) Australia to Sell A$1 Billion 105-Day Bills
  • 11:00: (AU) May Consumer Inflation Expectation, prior 4.6%

US stocks posted modest gains in a listless session, while Treasuries rose after a report showed inflation moderated slightly in April and swaps traders upped bets the Federal Reserve will cut rates this year.

The S&P 500 wavered between gains and losses before ending Wednesday’s session up 0.4%. The tech-heavy Nasdaq 100 posted a 1.1% gain, the highest close for the gauge since Aug. 18.

US consumer prices rose 0.4% in April with headline CPI up 4.9% on a year-on-year basis, its first reading below 5% in two years. That’s still well above the 2% level targeted by the Fed as central bank officials juggle the need to curb rampant inflation against a potential recession and banking sector angst.

Policy-sensitive two-year Treasury yields fell to 3.91% while rates on the 10-year tenor were 3.44%. Swaps contracts indicate traders are pricing in roughly 75 basis points of interest rate cuts this year.

Other News

Australian Trade Minister Don Farrell will head to China on Thursday for the first in-person meeting between the two countries’ top trade officials since 2019 in yet another sign of warming relations between Beijing and Canberra.

Farrell will meet with Chinese Commerce Minister Wang Wentao “to progress the resolution of outstanding trade impediments,” according to his press statement ahead of the visit.

The two met virtually in February where Wang told his counterpart that “the freeze is over and we’re now moving to “a warm spring.” Since then, coal, cotton and copper trade have resumed, according to Farrell, and China said it will speed up review on duties imposed on Australian barley.

“During my visit I will be advocating strongly for the full resumption of unimpeded Australian exports to China – for all sectors – to the benefit of both countries and in the interests of Australian exporters and producers,” Farrell said.

This is the first visit by an Australian trade minister to China since November 2019 and bodes well for both economies, setting the stage for stronger diplomatic ties. China is Australia’s largest trading partner, with the two-way trade in goods worth $287 billion in 2022.

Since Australia’s election of the center-left Labor government in May 2022, relations with Beijing are mending.

Farrell said in April he’s optimistic that punitive trade sanctions imposed by China on Australia’s exports could be lifted by the end of this year. During this trip, Australia’s trade chief said he will also meet with other Chinese political leaders and business representatives.

(Bloomberg)