Markets Overview
- ASX SPI 200 futures up 0.5% to 7,129.00
- Dow Average up 0.5% to 34,472.98
- Aussie up 0.9% to 0.6481 per US$
- U.S. 10-year yield fell 13.2bps to 4.1918%
- Australia 3-year bond yield fell 4 bps to 3.87%
- Australia 10-year bond yield fell 7.6 bps to 4.19%
- Gold spot up 0.9% to $1,915.43
- Brent futures down 1.4% to $82.89/bbl
Economic Events
- 10:30: (AU) Australia to Sell A$1 Billion 147-Day Bills
- 10:30: (AU) Australia to Sell A$1 Billion 91-Day Bills
Stocks climbed the most since June, while bond yields fell after economic reports in both the US and Europe fueled bets that major central banks will pause their interest-rate hikes to prevent a recession.
In late hours, a $200 billion exchange-traded fund tracking the Nasdaq 100 (QQQ) gained after a bullish revenue outlook from Nvidia Corp. — the chipmaker at the heart of the artificial-intelligence frenzy that has driven the equity-market higher this year. The company also jumped in extended trading after approving an additional $25 billion in buybacks.
Treasury two-year US yields, which are more sensitive to imminent policy moves, sank below 5% as data showed American business activity barely expanded on subdued customer demand. The 10-year German rate also slid as a contraction of private-sector activity in the euro area intensified. To Jennifer McKeown at Capital Economics, August’s flash Purchasing Managers’ indexes “strongly suggest that we are at or close to the peak in monetary tightening cycles.”
Another relevant economic signal came from the US mortgage industry, with applications for home purchases tumbling to an almost three-decade low. Separate data showed new-home sales hit the highest in over a year — as a surge in mortgage rates kept inventory on the resale market extremely limited. Traders also weighed a US government report saying that job growth in the year through March will probably be revised down by 306,000 — a smaller adjustment than some economists expected.
The advance in bonds Wednesday was also attributed to technical factors. That’s after a Treasury selloff that recently drove 10-year yields to the highest since late 2007 on speculation that interest rates would remain elevated for longer to curb inflation — even if the Fed decides to pause its hiking campaign in September.
Other News
A recent spike in natural gas prices triggered by labor disputes in Australia indicate that global markets are fragile, according to the head of the nation’s biggest producer of the fuel.
“The European market is concerned about the level of supply they have going into the winter,” Woodside Energy Group Ltd. Chief Executive Officer Meg O’Neill said on Bloomberg TV.
Benchmark prices in Europe on Monday hit a two-month high on news that strike action at Woodside’s liquefied natural gas facilities in Western Australia could start early next month. That combined with similar labor actions at Chevron Corp. facilities may put about 10% of global LNG at risk.
Europe doesn’t normally buy Australian gas, but possible outages could tighten the market and prompt a bidding war with Asia right before winter.
Workers at Woodside’s North West Shelf LNG export plant will take strike action as soon as Sept. 2 if they cannot reach an agreement during scheduled talks on Wednesday, the Offshore Alliance, a group representing two major labor unions, said over the weekend.
