- ASX SPI 200 futures up 0.2% to 7,065.00
- Aussie up 0.3% to 0.6560 per US$
- Australia 3-year bond yield rose 5.6 bps to 4.14%
- Australia 10-year bond yield rose 3.5 bps to 4.48%
- Gold spot up 0.1% to $1,992.25
- Brent futures down 0.7% to $81.42/bbl
US equity futures were little changed. There is no Treasury cash trading on Thursday due to the Thanksgiving holiday, while Japanese markets are also closed. Brazilian stocks climbed to the highest in two years, on a closing basis.
European bonds fell after a report that Germany will suspend debt limits for a fourth consecutive year, adding to concerns over more borrowing as the euro-area economy slows.
Chancellor Olaf Scholz’s government was forced into a radical budget overhaul by a ruling last week from Germany’s top court, Bloomberg reported Thursday. Yields on German 10-year debt climbed as much as six basis points, while yields on other core European bonds also rose after hawkish comments by policy makers.
Earlier, data showed S&P Global’s purchasing managers’ index was in contraction again in November, hitting 47.1. While that’s a bigger uptick than anticipated by economists, it marks the sixth consecutive month below the 50 level that indicates expansion. European stocks struggled for traction, with the Stoxx Europe 600 index edging about 0.3% higher.
In commodity markets, crude oil extended a decline as discord within OPEC+ forced the group to delay an upcoming meeting, quelling speculation of further production cuts by the Saudi-led alliance. Brent crude sank below $81 a barrel after a volatile session on Wednesday that saw prices swing by more than $4, while West Texas Intermediate was below $76.
Iron ore tumbled from from a nine-month high after Chinese authorities stepped up a campaign to try and cool the rally in the steelmaking ingredient. Bloomberg’s industrial metals subindex dropped by the most in two months as prices of nickel, copper and aluminum also retreated.
In Asia, Country Garden Holdings Co.’s shares and bonds surged in Hong Kong following news that Beijing included the builder in a draft list of 50 developers eligible for financial support, the latest move to plug an estimated $446 billion gap in funding needed to ease the housing crisis. A gauge of property stocks rallied 7%, set for its best week since early September.
Lithium extended an almost monthlong run of declines, taking its drop this year to 75%, with expectations the rout in the electric-vehicle battery metal is far from over.
Chinese prices of lithium carbonate, a semi-processed form of the metal, fell 2.3% on Thursday, and are down 20% so far this month. The last time they posted a daily gain was on Oct. 25. Spodumene, the lithium-bearing rock mined in Australia, has more than halved in 2023.
A supply glut has pushed down prices in 2023, after they surged in the previous couple of years. The global lithium market won’t return to deficit until 2028, according to forecasts from industry consultancy Benchmark Mineral Intelligence. Elevated interest rates are also leading to uncertainty over global EV demand, with some automakers rethinking their strategies.
“With lithium supply growing more next year, we are likely going to see prices falling further,” said Allan Ray Restauro, analyst at BloombergNEF. “On the demand side, some regional differences on EV sales have been dragging sentiment down around the industry.”
SQM, the world’s No. 2 lithium producer, warned investors last week the downward price trend could continue for the rest of the year. Albemarle Corp., the biggest miner, said earlier this month that some producers have started to rein in operations as prices fall below reinvestment economics.