Markets Overview
- ASX SPI 200 futures up 0.2% to 7,078.00
- Dow Average down 0.1% to 34,463.69
- Aussie up 0.1% to 0.6414 per US$
- U.S. 10-year yield rose 8.5bps to 4.3379%
- Australia 3-year bond yield rose 1.2 bps to 3.90%
- Australia 10-year bond yield rose 3.1 bps to 4.26%
- Gold spot up 0.3% to $1,894.89
- Brent futures down 0.4% to $84.50/bbl
Economic Events
Asian equities are set to rise on Tuesday following a rally in big tech that spurred a rebound on Wall Street.
Rising Treasury yields and likely upward pressure on rates in Asia may temper sentiment for risk taking as investors await a key speech later in the week by Federal Reserve Chair Jerome Powell.
Futures for Japanese shares advanced 1% while contracts for benchmarks in Australia and Hong Kong showed smaller gains. An index of US-listed Chinese stocks also rose.
The S&P 500 halted a four-day drop while the Nasdaq 100 rose about 1.5%, with Tesla Inc. up the most since March. Nvidia Corp., which helped ignite the artificial-intelligence frenzy that has driven this year’s equity surge, jumped over 8%. The chipmaker’s results are due Wednesday, and revenue is seen rising 65% from a year earlier, according to data compiled by Bloomberg.
In late US hours, SoftBank Group Corp. semiconductor unit Arm filed for what is set to be this year’s largest US initial public offering. Investors will also be watching shares of BHP Group Ltd. after the world’s biggest miner reported a 37% decline in full-year profit, missing analysts’ estimates.
Bonds resumed their selloff as signs of economic strength bolstered bets on still elevated rates. The yield on 10-year inflation-protected Treasuries pushed over 2% for the first time since 2009. Not long after, the yield on 10-year notes without that protection hit a level last seen in late 2007.
Bond yields were higher early Tuesday in Australia and New Zealand. Major currencies traded within narrow ranges.
Other News
China’s budget deficit shrank by more than a third so far this year, a sign of Beijing’s cautious fiscal policy despite the economy’s slowdown and a worsening housing slump.
The broadest measure of the fiscal gap — the so-called augmented deficit — was 3.3 trillion yuan ($449 billion) in the first seven months of this year, down 37% from the same period in 2022, according to Bloomberg calculations based on data released by the Ministry of Finance on Monday. Total revenue rose 6%, while spending was down 4.8% in the period.
The figures show how reticent the government at all levels has been so far this year to step up stimulus, even as economic conditions worsened since April and some analysts called for a fiscal boost. Many provinces took a severe hit to their finances in 2022 and they likely don’t have the capacity to substantially boost spending without much more support from the central government.
Last year, the total budget deficit for the 31 provinces hit the highest since at least 2012 as the costs of the Covid Zero policy soared, while revenues slumped due to the weak economy, tax breaks and a fall in land sales. In the first half of this year, a majority of provinces have shrunk their main budget deficit from last year, partly due to a recovery in tax revenue.
The augmented deficit is based on a combination of two government fiscal plans: the general and government fund budgets. Official data Monday showed revenue from the general public budget — which includes taxes and fees — was almost 14 trillion yuan in the seven months of the year, up 11.5% from the same period last year. That compares with a 13.3% increase in the year through June. Tax revenue rose 14.5% and income from deed taxes, which are paid when a property is bought or sold, rose 4.2%.
(Bloomberg)
