Markets Overview
- ASX SPI 200 futures down 0.2% to 7,083.00
- Dow Average up 1.1% to 35,817.23
- Aussie down 0.2% to 0.6607 per US$
- U.S. 10-year yield rose 9.2bps to 4.3476%
- Australia 3-year bond yield little changed at 4.01%
- Australia 10-year bond yield rose 5 bps to 4.41%
- Gold spot down 0.4% to $2,036.07
- Brent futures down 0.3% to $82.83/bbl
Economic Events
- 09:00: (AU) Nov. Judo Bank Australia PMI Mfg, prior 47.7
Wall Street saw a late-day rebound, with stocks notching one of their biggest November rallies on record, fueled by speculation the Federal Reserve will put an end to its aggressive hiking campaign.
After this month’s $3 trillion surge, the S&P 500 is now just 5% away from its all-time high. The gauge climbed over 8% in November — a feat achieved fewer than 10 times for that month since 1928, according to data compiled by Bloomberg. It was also the gauge’s best month since July 2022. Treasuries pared losses late Thursday. The dollar closed higher, but posted its worst month in a year.
US consumer spending, inflation and the labor market all cooled in recent weeks — adding to evidence that growth is gradually slowing. The core personal consumption expenditures price index, the Fed’s preferred gauge of underlying inflation, met economists’ estimates.
Other News
Australia’s home-price growth slowed in November as a resumption of interest-rate increases and deteriorating affordability pushed buyers to the sidelines, suggesting a gloomier outlook for the property market.
Bellwether Sydney rose 0.3%, while Melbourne edged down 0.1% for a price increase in Australia’s major cities of 0.6%, property consultancy CoreLogic Inc. said in a report Friday. There was also an increasing divergence in markets as mining-powered Perth and Brisbane jumped 1.9% and 1.3%, respectively.
“The housing market is moving through a new inflection point, with the rate of growth in home values becoming more diverse,” said Tim Lawless, research director at CoreLogic. “Downside risk factors have become more pronounced, including an expectation that interest rates could remain higher for longer, worsening affordability challenges and deeply pessimistic” consumer sentiment.
The Reserve Bank in November ended a four-month pause and increased borrowing costs to 4.35%, a 12-year high, though it’s expected to stand pat at Tuesday’s meeting. The RBA maintains a tightening bias as the economy and labor market show ongoing resilience and inflation stays sticky.
Australia’s property market has surprised with a recovery this year even as the central bank raised rates by 4.25 percentage points since May 2022. It has been fueled by a lack of new housing stock and a surge in population growth.
Indeed, the national Home Value Index reached a new record high in November. Housing values have risen 8.3% over the past 10 months, erasing earlier declines in a clear ‘V’ shaped recovery, CoreLogic said.
As for the outlook in Sydney and Melbourne, Lawless said slower growth conditions across the upper quartile of the two markets is now increasingly clear. “The more expensive end of the market tends to lead the cycles in these cities,” he said.
The upshot is that Sydney may follow Melbourne into negative territory in December, according to CoreLogic.
“Market conditions are now in favor of buyers as higher stock levels provide more choice, less urgency and greater opportunities to negotiate,” Lawless said.
(Bloomberg)
