Markets Overview

  • ASX SPI 200 futures up 0.3% to 7,382.00
  • Dow Average up 0.3% to 35,559.53
  • Aussie up 1.0% to 0.6718 per US$
  • U.S. 10-year yield little changed at 3.9568%
  • Australia 3-year bond yield fell 2 bps to 3.87%
  • Australia 10-year bond yield fell 0.9 bps to 4.06%
  • Gold spot up 0.3% to $1,965.46
  • Brent futures up 0.7% to $85.56/bbl

Economic Events

  • 09:00: (AU) July Judo Bank Australia PMI Mfg, prior 49.6
  • 11:30: (AU) June Investor Loan Value MoM, prior 6.2%
  • 11:30: (AU) June Owner-Occupier Loan Value MoM, prior 4.0%
  • 11:30: (AU) June Home Loans Value MoM, est. 1.8%, prior 4.8%
  • 11:30: (AU) June Private Sector Houses MoM, prior 0.9%
  • 11:30: (AU) June Building Approvals MoM, est. -8.0%, prior 20.6%
  • 14:30: (AU) Aug. RBA Cash Rate Target, est. 4.35%, prior 4.10%

Asian stocks were poised to start the new month higher, following the bullish mood on Wall Street that saw the S&P 500 finish July with its longest streak of monthly gains in almost two years.

Japanese, Hong Kong and Australian futures pointed to gains in early trading Tuesday as concerns dissipated that equity markets could become overheated and company earnings may decline. Recent US data has pointed to inflation becoming tamed, boosting optimism the world’s biggest economy will have a soft landing as the Federal Reserve nears the end of its monetary-tightening cycle.

The S&P 500 edged higher to around 4,590 Monday, closing at a 16-month high. The megacap space saw subdued action, with Apple Inc. and Inc. due to report earnings in the coming days. The Nasdaq 100 notched its longest streak of monthly gains since August 2020. Treasury 10-year yields traded near 3.95% while the dollar posted a small gain.

The buoyant mood on Wall Street has seen a retreat among bearish institutional investors, economists and strategists as market returns and economic data continue to challenge expectations, said Mark Hackett at Nationwide.

In Asia, focus will turn to China, where stocks ended July on an optimistic note. This comes after Beijing’s top economic planning agency released a wide-ranging policy document containing some recently announced consumption-related initiatives, while a separate report said big cities such as the capital and Shenzhen may ease curbs on the property sector.

Meanwhile, the yen dropped after the Bank of Japan announced an unscheduled bond-purchase operation to tamp down rates after adjusting policy on Friday to allow benchmark yields to climb as high as 1%.

In Australia, financial markets are betting the Reserve Bank will keep its cash rate unchanged on Tuesday, while economists see a 25 basis-point hike to 4.35%.

Other News

Australia’s house price growth decelerated in July following an increase in property listings that suggest sellers are taking advantage of current market strength, including those struggling to meet their obligations after rapid interest-rate increases.

Prices across Australia’s capital cities advanced 0.8%, a fifth straight monthly gain, albeit slower than June’s 1.2% pace, data from property consultancy CoreLogic Inc. showed Tuesday. Market bellwether Sydney rose 0.9% while Melbourne grew at a more subdued 0.3%.

July’s cooling was driven by the upper quartile of the market, which tends to lead the cycle and could be “a sign of a broader easing in the pace of growth over the coming months,” said Tim Lawless, research director at CoreLogic.

The figures come as the the Reserve Bank has raised its key rate to 4.1% — the highest since April 2012 — hitting consumer sentiment. At the same time, Australia’s job market remains strong, with unemployment at an ultra-low 3.5%.

The cooling in property price momentum will be welcomed by the RBA ahead of its rate decision later Tuesday. Financial markets are betting the cash rate will remain unchanged while economists see a 25 basis-point hike to 4.35%.

The central bank has lifted borrowing costs by 4 percentage points since May 2022 and signaled a higher hurdle to raise further as it tries to bring down inflation and engineer a soft landing.

Tuesday’s data showed the flow of new home listings in capital city markets rose almost 4% over July, bucking a seasonal trend in which vendors traditionally put off sales during winter months.

“It may be the case that more home owners are picking current market conditions as a good time to sell,” said Lawless. “Another possibility is that we are seeing the first signs of motivated selling as the rapid rate hiking cycle catches up with household balance sheets.”

Even so, the data indicate the housing rebound that began earlier this year persists — over the three months to July, prices in Sydney surged 4.5% for a median home value of A$1.08 million ($720,000).

Strong population growth in Australia and a supply shortage has fueled price gains despite higher borrowing costs.

“Overall, the housing market remains resilient to a double dip downturn, with housing values continuing to trend higher across most regions of the country,” Lawless said. “The trend in advertised stock levels will be a key factor determining housing market outcomes.”