Markets Overview

  • ASX SPI 200 futures down 0.5% to 7,235.00
  • Dow Average down 0.5% to 34,721.91
  • Aussie up 0.1% to 0.6484 per US$
  • U.S. 10-year yield little changed at 4.1062%
  • Australia 3-year bond yield fell 4.7 bps to 3.74%
  • Australia 10-year bond yield fell 4.5 bps to 4.03%
  • Gold spot down 0.1% to $1,939.98
  • Brent futures up 1.2% to $86.86/bbl

Economic Events

  • 09:00: (AU) Aug. Judo Bank Australia PMI Mfg, prior 49.4
  • 11:30: (AU) July Home Loans Value MoM, est. 0%, prior -1.0%
  • 11:30: (AU) July Investor Loan Value MoM, prior 2.6%
  • 11:30: (AU) July Owner-Occupier Loan Value MoM, prior -2.8%

Stocks in Asia were set for a mixed start to September after a mooted session on Wall Street as traders await Friday’s jobs reading to gauge the outlook for Federal Reserve policy. Bond yields fell and the dollar strengthened.

Futures for equity benchmarks in Japan and Australia pointed to declines, while those for Hong Kong showed a slight increase. The S&P 500 closed lower on Thursday to notch its first monthly slide since February. Treasury 10-year yields extended their retreat after recently hitting levels last seen in 2007 while an index of the dollar had its best month since February.

Concerns that the Fed will keep interest rates higher for longer to prevent a flare-up in price pressures has taken the wind out of equity markets around the world, adding to worries about China’s faltering economic growth.

The Fed’s preferred measure of underlying inflation saw the smallest back-to-back increases since late 2020, encouraging consumer spending. Markets took the report in stride, with the numbers illustrating the divergence within the US economy, according to Jeffrey Roach at LPL Financial.

Wall Street is now bracing for Friday’s labor-market data, which will provide further insights on the Fed’s next steps. The report is forecast to show employers boosted their payrolls by nearly 170,000 in August, while the unemployment rate held at a historic low of 3.5%.

Other News

Australia’s housing-market momentum accelerated in August as demand from a growing population vacuumed up new supply and outweighed the impact of the central bank’s aggressive policy tightening campaign.

Sydney prices, the national bellwether, advanced 1.1% and are up 8.8% from a January trough, property consultancy CoreLogic Inc. said in a report Friday. Brisbane led August’s gains  — climbing 1.5% — with every major city recording an expansion outside Hobart on the island state of Tasmania.

“It’s clear the Australian housing recovery is firmly entrenched,” said Tim Lawless, research director at CoreLogic. “Housing demand from strong population growth is set to remain a feature over the coming years, and we are yet to see any material supply response.”

The Reserve Bank has raised borrowing costs by 4 percentage points since May last year to take the cash rate to its highest level in over 11 years. The unexpected recovery in the property market is a potential worry for policymakers as households feeling wealthier are more likely to spend, adding to inflation pressures.

The revival in property comes as total advertised housing supply slipped 15.5% in August compared with a year earlier across the eight major cities. In a sign the problem is unlikely to be resolved in the near term, separate figures this week showed the total number of dwellings approved slumped 8.1% in July, following a 7.9% decline in June.

Despite the RBA’s concerns about housing, the bank is expected to leave policy unchanged for a third straight meeting next week as inflation cools.

The Corelogic report also showed the national rental index climbed 0.5%, a 36th straight monthly increase. In annual terms, the index is up 9% in August, almost three times the decade average of 3.2%.

“Every capital city recorded a reduction in total rental listings over the past month, reinforcing ongoing concerns around a lack of rental supply,” Lawless said.

“With dwelling approvals continuing to trend lower, especially across the medium to high density sector, the outlook for additional rental supply remains dim.”