Markets Overview

  • ASX SPI 200 futures little changed at 7,226.00
  • Dow Average down 0.3% to 34,299.12
  • Aussie little changed at 0.6884 per US$
  • U.S. 10-year yield rose 4.7bps to 3.7613%
  • Australia 3-year bond yield rose 0.8 bps to 4.02%
  • Australia 10-year bond yield rose 2.5 bps to 4.03%
  • Gold spot little changed at $1,957.98
  • Brent futures up 1.2% to $76.61/bbl

Economic Events

The Australian dollar and US equity futures rose in early Asian trading Monday amid signs of improving ties between the US and China, while contracts for benchmarks in Asia showed muted moves.

The Australian dollar edged higher against the greenback, adding to its 2% rise last week — the currency’s third consecutive weekly gain against the dollar. The advance has attracted hedge funds to short the currency.

The small advance Monday follows positive signs Sino-US relations will thaw, and also ongoing optimism China will unleash fresh stimulus to boost its flagging recovery.

Futures contracts for Australian and Hong Kong equities were slightly lower, mirroring the decline in US stocks Friday, while Japanese contracts made a small advance.

Investors are keenly monitoring for signs of further official support for the Chinese economy after the country cut a key lending rate last week. The country is set to cut one and five year loan prime rates in decisions expected Tuesday, according to economist forecasts.

Nomura Holdings Inc., Standard Chartered Plc and Morgan Stanley have said authorities may increase the quota for local government special-purpose bonds to finance infrastructure investments in a potential stimulus package to boost growth.

US stock and bond markets will be closed for the Juneteenth holiday Monday. The S&P 500 declined 0.4% Friday to end a six-session streak of advances as investors look for more insight on Federal Reserve interest rate decisions.

Fed Chair Jerome Powell will give his semi-annual report to Congress on Wednesday. Federal Reserve Bank of St. Louis President James Bullard and his counterparts in New York and Chicago are all set to speak in the week ahead.

The Fed kept interest rates unchanged last week but warned of more tightening ahead. In the past, pausing rate hikes for three months after such a run of interest rate hikes has boosted stock prices.

Other News

Australia will invest A$2 billion to build thousands of government-subsidized homes across the country, Prime Minister Anthony Albanese said, a move that will help resolve a housing supply crunch that is being blamed for resurgent property prices.

“This investment will build more housing, for more Australians, in more parts of our nation,” Albanese said in a statement on Saturday. “The Social Housing Accelerator payment will be delivered to state and territory governments within the next two weeks.”

The Social Housing Accelerator will “create thousands of homes for Australians on social housing waiting lists and will increase housing supply sooner,” Albanese said, adding his government will continue to work to address housing affordability, supply, and homelessness.

Housing has become a hot-button issue in Australia as an acute supply shortage, together with a rapid rebound in migration, put upward pressure on home prices and rents at a time when inflation is already eating into people’s purchasing power.

The center-left Labor government is also establishing a A$10 billion Housing Australia Future Fund to build 30,000 new social and affordable rental homes in its first five years, in addition to introducing incentives to boost investments in build-to-rent accommodation. The HAFF will need to pass in the Senate next week.

Australia’s Property Council welcomed the announcement as a “positive step in addressing Australia’s housing affordability crisis,” though Chief Executive Michael Zorbas expressed continued concern about “deep declines in new apartment construction in particular.”