Markets Overview

  • ASX SPI 200 futures down 0.5% to 7,111.00
  • Dow Average down 0.2% to 36,181.87
  • Aussie down 0.9% to 0.6616 per US$
  • U.S. 10-year yield rose 9.2bps to 4.2876%
  • Australia 3-year bond yield fell 4.1 bps to 4.03%
  • Australia 10-year bond yield fell 4.6 bps to 4.45%
  • Gold spot down 2.0% to $2,031.33
  • Brent futures down 0.8% to $78.21/bbl

Economic Events

  • 09:00: (AU) Nov. Judo Bank Australia PMI Servic, prior 46.3
  • 09:00: (AU) Nov. Judo Bank Australia PMI Compos, prior 46.4
  • 11:30: (AU) 3Q Net Exports of GDP, est. -0.2, prior 0.8
  • 11:30: (AU) 3Q BoP Current Account Balance, est. A$3.2b, prior A$7.7b
  • 14:30: (AU) Dec. RBA Cash Rate Target, est. 4.35%, prior 4.35%

Wall Street kicked off the week with losses, with both stocks and bonds down in a signal that traders’ aggressive pricing of Federal Reserve rate cuts may have gone too far.

A slew of key jobs readings over the next few days will be closely watched for clues on the Fed’s next steps — with the potential to reignite volatility that has recently shown signs of anemia. Technically “overbought” conditions and bullish positioning have left markets vulnerable to corrections after the historic rallies in both equities and Treasuries last month.

The S&P 500 fell from the highest since March 2022, while the Nasdaq 100 dropped 1% amid a rout in megacaps. US two-year yields rose nine basis points to 4.63%. The dollar gained.

Other News

France plans to allow Australia’s naval forces to operate out of its military facilities in the Pacific, the latest sign of a return to warmer relations after a feud over Aukus two years ago.

The two countries revealed a roadmap to boost economic, research and defense cooperation during a visit to Australia by France’s foreign minister Catherine Colonna on Monday. The development will also boost Canberra’s reach in the Pacific.

Under the deal, the two countries have agreed to enhance “reciprocal access” for their respective military, with the roadmap document saying access to France’s installations in the Pacific and Indian Oceans will “facilitate a more sustained Australian presence in priority areas of operation.”

Speaking in Canberra on Monday alongside Australia’s Foreign Minister Penny Wong, Colonna said the agreement was a “huge achievement” and a step toward the kind of relationship the two countries had prior to the announcement of a wide-ranging security deal among Australia, the US and the UK in September 2021.

When then-Prime Minister Scott Morrison announced the Aukus pact to build a fleet of nuclear submarines for Canberra, he scrapped a billion-dollar contract with France to construct conventionally-powered submarines for Australia. President Emmanuel Macron said his government had not been consulted on the arrangement.

Meanwhile, the Pacific has seen increased geopolitical competition in recent decades, as the Chinese government has expanded its influence at the expense of traditional partners such as Australia.

France has a long involvement in the Pacific with three territories in the region, including New Caledonia and French Polynesia.