Markets Overview

  • ASX SPI 200 futures up 0.6% to 7,171.00
  • Dow Average up 0.5% to 33,061.57
  • Aussie up 1.1% to 0.6573 per US$
  • U.S. 10-year yield fell 4.9bps to 3.5950%
  • Australia 3-year bond yield rose 1 bp to 3.38%
  • Australia 10-year bond yield rose 1 bp to 3.62%
  • Gold spot up 0.8% to $1,977.56
  • Brent futures up 2.4% to $74.37/bbl

Economic Events

  • 11:00: (AU) Australia to Sell A$500 Million 4.25% 2026 Bonds
  • 11:30: (AU) April Investor Loan Value MoM, prior 3.7%
  • 11:30: (AU) April Owner-Occupier Loan Value MoM, prior 5.5%
  • 11:30: (AU) April Home Loans Value MoM, est. 2.0%, prior 4.9%

A renewed rally in tech giants extended this year’s surge in the S&P 500 to almost 10% ahead of Friday’s jobs report amid bets the Federal Reserve will pause its interest-rate hikes in June.

The S&P 500 rose 1% on Thursday, reclaiming its 4,200 mark. A contrarian indicator from Bank of America Corp. that tracks Wall Street strategists’ average recommended allocation to stocks is the closest it has been to notching a “buy” signal in over six years.

Traders also geared up for the monthly jobs report on Friday, with forecasters projecting a moderation in the pace of hiring that could potentially allow the Fed to pause its tightening policy in June.

Fed Bank of Philadelphia President Patrick Harker said “we should at least skip this meeting in terms of an increase. In an essay Thursday, his St. Louis counterpart James Bullard, said he believes interest rates are at the low end of what’s likely to be sufficiently restrictive to bring down inflation.

Meantime, the Treasury is considering postponing its regular three- and six-month bill auctions “tentatively” scheduled for next Monday if constraints around the statutory debt limit remain.

Senators scrambled Thursday to agree on a plan for swift consideration of the debt-limit deal forged by President Joe Biden and House Speaker Kevin McCarthy ahead of a June 5 deadline to avert a destabilizing default.

Other News

Australia’s Trade Minister Don Farrell will head to Brussels this weekend for the final rounds of negotiations on a free trade agreement with the European Union, which both sides signaled may be completed by the end of the European summer.

The visit would include a meeting with EU Trade Commissioner Valdis Dombrovskis on Monday, Farrell said in Canberra on Thursday, as part of a speech in which he pushed for greater trade diversification for the Australian economy.

Both the EU and Australia are pushing to seal the agreement within months, which would remove restrictions on a wide range of agricultural produce as well as boost supply chains of Australia’s critical minerals to European nations.

One of the major sticking points in the negotiations, however, has been EU’s demand for geographical indication protection to hundreds of products that could affect the branding of Australia’s exports such as wine and cheese. To this, Farrell said Australian prosecco producers shouldn’t look to begin relabeling their products “just yet.”

“These people who produce those products, it’s not just an economic issue, this is a way in which they’ve maintained links with their mother country,” Farrell said. “So for them it’s not just an economic issue, it’s an emotional issue.”

Farrell said he didn’t want to just “sign a deal for the sake of it” and would be willing to prolong negotiations if he deemed the agreement wasn’t fair.

During his speech, the trade minister encouraged businesses to expand export portfolios and warned against “over reliance on any single trading partner.” Australian agricultural producers struggled to find new export markets in 2020 after the country’s largest trading partner China suddenly imposed a range of trade sanctions on Australian produce.

“Across the private sector, any business that relied on a single client, would be destined for failure, so too for global trading economies,” Farrell said.