Markets Overview

  • ASX SPI 200 futures down 0.1% to 7,276.00
  • Dow Average down 0.3% to 33,951.52
  • Aussie up 0.2% to 0.6797 per US$
  • U.S. 10-year yield little changed at 3.7208%
  • Australia 3-year bond yield fell 3.7 bps to 3.95%
  • Australia 10-year bond yield fell 4.3 bps to 3.98%
  • Gold spot down 0.2% to $1,932.50
  • Brent futures up 1.4% to $76.94/bbl

Economic Events

  • 10:30: (AU) Australia to Sell A$1 Billion 77-Day Bills
  • 10:30: (AU) Australia to Sell A$1 Billion 112-Day Bills

US stocks slid after a renewed warning from Federal Reserve Chair Jerome Powell that higher rates would be needed to combat inflation, thwarting bets that the US central bank was nearing the end of its tightening cycle.

The Nasdaq 100 has slumped more than 2% over the past three sessions. AI and chipmakers were weak with Intel Corp. and Avanced Micro Devices Inc. falling around 6% on Wednesday. The tech-heavy benchmark and the S&P 500 Index notched three-day losing streaks, the longest since early May. Two-year Treasury yields, considered the most sensitive to interest rates, rose to 4.7% following a bounce on a strong 20-year bond auction.

Fed Chair Jerome Powell reiterated that higher rates are needed to combat inflation in his semi-annual report to Congress. Two more rate hikes this year is “a pretty good guess,” he said, while backing the central bank’s 2% inflation target.

Other News

Australia has doubled funding for its ‘green bank’ to invest in modernizing the country’s electricity grid to help meet the government’s ambitious climate change goals.

The Clean Energy Finance Corp. will soon receive a final tranche of A$11.5 billion ($7.8 billion)—part of an overall A$19 billion in government funding—after the Senate majority passed a bill Wednesday. The bill will now go back to the House where the government majority is expected to pass it in August.

A total of A$19 billion in direct new funding has been allocated to the public corporation to deliver the government’s Rewiring the Nation plan to bring more renewable energy into the nation’s major east coast electricity grid.

Another A$1 billion has been set aside for the corporation in an account in the climate change department to fund household energy upgrades. The law change will also give the climate change minister the power to hand over the A$1 billion to the corporation without having to consult Parliament, an element of the bill that was hotly contested by the opposition parties.

Prime Minister Anthony Albanese’s government wants 82% of Australia’s energy to be sourced from renewables and to reduce emissions by 43% by 2030.

Urgent support is needed for projects that will help manage the early closure of coal-fired generators, the government says.

The corporation will use the new funds to help finance several “critically important” projects to reconfigure the electricity grid so it is “geographically appropriate for where new generation resources are,” Tim Buckley, Climate Energy Finance CEO and former ministerial adviser, said in an interview.

The Battery of the Nation project in Tasmania will store hydro energy and the Marinus Link project will transmit hydro-electricity from the island state to the mainland. Other projects will connect three mainland state grids.

Meanwhile, the timetable for the country’s largest clean energy project, Snowy Hydro 2, has been extended. It won’t come online until at least late 2028, not 2027 as planned, the company said. The delay will make it tougher to reach the climate goals, Buckley said.

Expanding the corporation’s mandate to allow it to invest in energy efficiency, critical mineral processing and electric vehicle manufacturing would generate “thousands of jobs” and change the country “from being a petro state” to “a renewable energy superpower,” he said.

The clean energy finance corporation has been praised for its exceptional returns on an initial A$10 billion invested in clean energy projects. It says it earned A$2.42 for every A$1 invested across 285 transactions in the past 10 years. Across the decade total transactions were worth $42.8 billion, CEFC CEO Iam Learmonth said.