Markets Overview

  • ASX SPI 200 futures up 0.4% to 7,274.00
  • Dow Average up 0.3% to 34,837.71
  • Aussie down 0.6% to 0.6445 per US$
  • U.S. 10-year yield rose 7.1bps to 4.1788%
  • Australia 3-year bond yield fell 1 bp to 3.73%
  • Australia 10-year bond yield fell 2.2 bps to 4.00%
  • Gold spot little changed at $1,940.06
  • Brent futures up 2.0% to $88.55/bbl

Economic Events

  • 11:00: (AU) Aug. Melbourne Institute Inflation, prior 0.8%
  • 11:00: (AU) Aug. Melbourne Institute Inflation, prior 5.4%
  • 11:30: (AU) 2Q Company Operating Profit QoQ, est. 0%, prior 0.5%
  • 11:30: (AU) Aug. ANZ-Indeed Job Advertisements , prior 0.4%
  • 11:30: (AU) 2Q Inventories SA QoQ, est. 0.4%, prior 1.2%

Asian stocks looked set for modest gains as traders mulled US jobs data that supported optimism the Federal Reserve is nearing the end of its tightening cycle. US markets are shut Monday for the Labor Day holiday.

Futures contracts for Japanese and Australian equities edged higher after the S&P 500 Index eked out a gain Friday to notch its best week since June. Tesla Inc. dropped over 5%, while energy shares rallied as oil topped $85 a barrel, with West Texas Intermediate futures climbing for an eighth straight day.

China traders will look to see if equities there can build on last week’s advance. Treasury futures were little changed while the dollar was steady after gaining Friday against major peers.

Friday’s jobs report showed a labor market undergoing a controlled cooling, illustrated by solid hiring, slower earnings growth and more people returning to the workforce. The moderation gives the Fed room to pause rate increases this month while keeping options open for another hike later in the year.

In Asia, China’s trade and inflation data this week will likely signal that the economy’s recovery remains fragile, keeping pressure on policymakers to roll out more stimulus. Global demand for Chinese goods is still weak, as reflected by the depressed level of manufacturing gauges in the country’s main export markets. And an ongoing slump in the property market is curbing China’s import demand for building materials.

 

Other News

The regulator suing Qantas Airways Ltd. for allegedly selling seats on thousands of cancelled flights is seeking a record penalty of more than A$250 million ($162 million), making the lawsuit a test case for the watchdog’s hardened stance against breaches of consumer law.

Fines for failing customers in Australia should stretch to several hundred million dollars, rather than tens of millions, Gina Cass-Gottlieb, chair of the Australian Competition & Consumer Commission, said in a radio interview with the Australian Broadcasting Corp. on Friday.

Companies in Australia generally aren’t scared enough of breaking the law, and penalties for misleading and mistreating consumers must be sufficiently large to act as a deterrent, she said.

The ACCC, Australia’s primary antitrust regulator, on Thursday started Federal Court proceedings against Qantas, claiming the airline continued to sell tickets on more than 8,000 services last year that it had already scrapped. After flights were pulled, Qantas sold seats on average for more than two weeks, and sometimes longer than a month, the regulator said.

A fine of A$250 million, for instance, would equate to about 10% of Qantas’ record-breaking annual profit for the 12 months ended June. The company has A$4.4 billion in cash and undrawn debt on its balance sheet.

Shares in Qantas were down 0.9% as of 11:07 a.m. in Sydney, heading for a second day of declines. The stock fell 2% Thursday after the ACCC unveiled its claims against the airline.

The current record for a breach of consumer law in Australia stands at A$125 million against Volkswagen AG, Cass-Gottlieb said. She said the regulator wants Qantas to pay more than double that figure if the case is proven.

(Bloomberg)