Markets Overview
- ASX SPI 200 futures down 0.3% to 7,536.00
- Dow Average down 0.3% to 38,429.37
- Aussie little changed at 0.6547 per US$
- U.S. 10-year yield rose 4.5bps to 4.3206%
- Australia 3-year bond yield fell 1.8 bps to 3.73%
- Australia 10-year bond yield fell 1.1 bps to 4.17%
- Gold spot little changed at $2,026.36
- Brent futures up 0.9% to $83.06/bbl
Economic Events
- 09:00: (AU) Feb. Judo Bank Australia PMI Servic, prior 49.1
- 09:00: (AU) Feb. Judo Bank Australia PMI Compos, prior 49.0
- 09:00: (AU) Feb. Judo Bank Australia PMI Mfg, prior 50.1
- 10:30: (AU) Australia to Sell A$1 Billion 91-Day Bills
- 10:30: (AU) Australia to Sell A$1 Billion 140-Day Bills
- 13:00: (AU) RBA’s Bullock-Senate Committee on reforms legislation
Wall Street traders kept a lid on stocks ahead of results from Nvidia Corp. — the chipmaker at the heart of the artificial-intelligence frenzy that has powered the bull market. Equities remained under pressure as the latest Federal Reserve minutes showed officials are in no rush to cut rates.
Just moments away from Nvidia’s quarterly numbers, investors around the world are waiting to see whether the firm will be able to match the sky-high expectations surrounding the technology that has been dubbed an opportunity of a lifetime. Given its massive influence on broader indexes, Goldman Sachs Group Inc.’s trading desk has called the chipmaker “the most important stock on planet earth.” A member of the “Magnificent Seven” group of megacaps, Nvidia has been responsible for one-third of the Nasdaq 100’s gain this year.
“Nvidia has been the ‘poster child’ of AI enthusiasm because NVDA makes the type of semiconductor chips that power generative AI and demand for those chips has gone through the roof,” said Tom Essaye, founder of The Sevens Report. “The AI-driven rally in the ‘Mag Seven’ is largely justified by the fact that they’re making a lot more money than they were previously.”
The S&P 500 dropped to around 4,970, while the Nasdaq 100 underperformed — with Nvidia down 3%. The chipmaker is still the best performer in the US equity benchmark this year, up about 35%. Treasury yields climbed after a $16 billion sale of 20-year bonds.
Other News
Australia’s government needs to do more to manage price pressures in the economy and not leave the “heavy lifting” solely to the Reserve Bank, a leading think thank said in a report.
“The RBA has a blunt lever in interest rates, but the government has more options,” said Cassandra Winzar, chief economist at the Committee for Economic Development of Australia. “The federal government and the RBA must be on the same page to ensure a soft landing.”
Amid soaring prices for rent, food and energy, Prime Minister Anthony Albanese has pledged to further address the spiraling cost of living in the budget in May. But there are concerns that some of its fiscal measures may work counter to monetary policy and prolong the wait for rate cuts.
The central bank remains hawkish, reluctant to reduce the benchmark rate from a 12-year high of 4.35% until it’s confident inflation will return to the board’s 2-3% target within a reasonable timeframe.
The government maintains that its policies, including a revised tax plan that will give greater relief to lower- and middle-income Australians, won’t exacerbate inflation.
“Fiscal policy is working with monetary policy, not against it,” Albanese said in a January address to the National Press Club, adding a second consecutive budget surplus this fiscal year remained a possibility.
The report also called for increased efforts to boost productivity, particularly through innovation and technology, and steps to fix an acute shortage of housing in much of Australia.
CEDA noted that inflation and high rates were putting more pressure on younger, lower income households and new entrants to the property market, “while older and more established homeowners continue to spend, benefiting from paid-off mortgages and increased interest rates on saving.”
CEDA also highlighted the need for the government to invest more heavily in the transition to cleaner energy, calling 2024 “a critical year for emissions targets and energy policy.”
According to CEDA Senior Economist Andrew Barker, a carbon price would assist the transition by giving a clear signal to investors and encouraging consumers to use lower-emissions goods, while also improving the government’s fiscal balance.
(Bloomberg)
