Markets Overview

  • ASX SPI 200 futures down 0.4% to 7,045.00
  • Dow Average up 0.1% to 33,670.29
  • Aussie down 0.2% to 0.6304 per US$
  • U.S. 10-year yield fell 8.6bps to 4.6124%
  • Australia 3-year bond yield rose 3.8 bps to 3.95%
  • Australia 10-year bond yield rose 9.4 bps to 4.46%
  • Gold spot up 3.4% to $1,932.82
  • Brent futures up 5.7% to $90.89/bbl

Economic Events

  • 10:30: (AU) RBA’s Jones—Speech

Haven assets are set to be in focus in Asia Monday as traders nervously watch events in the Middle East, with the prospect of a ground offensive in Gaza looming large over markets.

Equity futures in Australia, Japan and Hong Kong are pointing to early losses when markets open, after US stocks fell on Friday as traders sought out safety. The US dollar and yen were steady in early trading on Monday as the US held talks with Iran through back-channels to head off a widening of the conflict, with the exchange of fire growing more intense on Israel’s border with Lebanon.

A sharper escalation of the crisis could bring Israel into a direct clash with Iran, a supplier of arms and money to Hamas, which the US and the European Union have designated a terrorist group. In that scenario, Bloomberg Economics estimates oil prices could soar to $150 and global growth drop to 1.7% — a recession that takes about $1 trillion off world output.

The Australian dollar remained subdued on Monday, while New Zealand’s currency advanced after voters elected a new government.

Traders also waded through the latest economic data and comments from central bank officials for clues on the policy outlook. Federal Reserve Bank of Philadelphia President Patrick Harker said disinflation is under way and reiterated that he favors holding interest rates where they are, barring a sharp change in data, despite a lift in US consumers’ year-ahead inflation expectations in early October.

Markets will also be parsing key economic data this week to gauge the health of the global economy. Among the highlights are Chinese growth data, inflation readings in Japan and New Zealand as well as central bank decisions in China, Indonesia and South Korea. Meantime, Fed chairman Jerome Powell is set to speak later this week following a string of stronger than expected data readings.

Other News

Australian Prime Minister Anthony Albanese faces a struggle to reunite a more divided nation after one of the cornerstone promises of his election, to include a voice for Indigenous people in the nation’s constitution, failed at a referendum.

Albanese emerged ashen-faced before reporters on Saturday night after it was clear that the Voice to Parliament referendum had been comprehensively defeated. With more than half of the vote counted, about 59% of the electorate opposed the measure and 41% supported it.

Chris Wallace, a professor at the University of Canberra, said the prime minister had been given a wake-up call by voters.

“Politically, it’s brought him down to earth,” she said, adding that Albanese had proved “a bit cavalier” in his choice to move ahead with the referendum despite a lack of bipartisan support. “In retrospect, probably a little too much was taken for granted.”

The result will put pressure on the Australian leader to refocus his government on the pressing concerns of voters, who are struggling with elevated inflation and high interest rates. One point in his favor is it’s still two years until the next election so he has time to improve the economic picture.

Albanese pledged to hold the referendum at the height of his popularity, shortly after his center-left Labor party won the May 2022 election. With his approval rating high in his first year in office, the prime minister believed he could make history with the first change to the constitution in almost 50 years.

Instead, his polling plunged as the Voice campaign turned divisive, exposing deep differences over how to treat Australia’s Aboriginal and Torres Strait Islanders. In October 2022, Albanese had an approval rating of 59% — one year later, at the end of the campaign, that had dropped to 46%.

“When you do the hard things, when you aim high, sometimes you fall short,” Albanese told reporters in Canberra on Saturday evening, adding that he fully accepted the result of the vote. But, he added, “I will always be ambitious for our country.”

While the referendum vote was a major personal blow for Albanese, his political standing is unlikely to be damaged in the long term. “Perhaps it will temper a little Anthony Albanese’s supreme confidence in his own judgment,” Wallace said.

Despite the prime minister’s prominent role in the “yes” campaign and the personal blow dealt to him by the rejection of the Voice, there are indications it may not hurt his long-term electoral prospects.

A poll by GIC published in the Daily Telegraph newspaper on Friday found the Voice to Parliament was very low on voters’ list of priorities. It ranked 17th, far below housing, household costs and interest rates.