Markets Overview

  • ASX SPI 200 futures little changed at 7,951.00
  • Dow Average down 0.6% to 39,572.10
  • Aussie down 0.5% to 0.6487 per US$
  • US 10-year yield rose 12.7bps to 4.3271%
  • Australia 3-year bond yield rose 0.7 bps to 3.62%
  • Australia 10-year bond yield little changed at 3.96%
  • Gold spot up 0.5% to $2,241.55
  • Brent futures up 0.7% to $87.59/bbl

Economic Events

  • 09:00: (AU) March Judo Bank Australia PMI Mfg, prior 46.8
  • 09:10: (AU) RBA’s Kent-Speech
  • 11:00: (AU) March Melbourne Institute Inflation, prior -0.1%
  • 11:00: (AU) March Melbourne Institute Inflation, prior 4.0%
  • 11:30: (AU) March ANZ-Indeed Job Advertisements , prior -2.8%
  • 11:30: (AU) RBA Minutes of March Policy Meeting

Wall Street traders sent both stocks and bonds lower after solid US factory data reinforced speculation that the Federal Reserve will be in no rush to cut interest rates.

Treasuries fell across the curve — with 10-year yields climbing over 10 basis points — as manufacturing unexpectedly expanded for the first time since September 2022 — while input costs climbed. Following the report, the amount of Fed easing priced into swap contracts for this year slid to around 65 basis points — less than forecast by policymakers. Equities also lost traction after the S&P 500 notched its fifth-straight month of gains.

Later this week, a report is expected to show employment gains continued in March while wage growth moderated. Fed Chair Jerome Powell — who is set to speak Wednesday — said Friday that officials are awaiting more evidence prices are contained.

US 10-year yields hovered near their 2024 highs. The S&P 500 fell below 5,250. Megacaps were mixed, with Apple Inc. down and Microsoft Corp. up. The dollar rose. Oil and gold climbed as an Israeli attack in Syria threatened to widen the conflict in the Middle East.

Other News

Australia’s housing market extended gains to a 14th consecutive month in March amid declining affordability and borrowing costs at a 12-year high which cooled momentum in two of the nation’s biggest cities.

Bellwether Sydney advanced 0.3% while prices in Melbourne stabilized, resulting in an overall increase of 0.6% for Australia’s major cities — unchanged from February, property consultancy CoreLogic Inc. said in a report on Tuesday. Perth and Adelaide led the pack, with gains of 1.9% and 1.4% respectively.

But the overall rise in house prices in Australia’s key cities has slowed from a peak in mid-2023, according to Tim Lawless, research director at CoreLogic.

“Since then, we’ve seen a whole bunch of things happen that have probably slowed the market, including further rate hikes, worsening affordability and of course we’ve also seen a peak in overseas migration,” he said.

Australia’s property market surprisingly recovered last year despite the Reserve Bank’s aggressive policy tightening campaign since May 2022. CoreLogic’s national home value index has advanced 33.4% since the onset of Covid-19, with Sydney climbing 25.4% during that period.

The RBA’s tightening cycle, combined with an acute shortage of dwellings and booming population growth, has sparked a housing crisis in parts of Australia. The problem is particularly acute in Sydney where buyers are being priced out of the market given as an average home costs 13-times income.

The RBA left interest rates at 4.35% for a third straight meeting in March and dropped its hawkish bias as inflation continues to moderate. Financial markets and economists expect the central bank will embark on an easing cycle in the second half of this year.

Lawless said any cuts to the cash rate before the end of 2024 may not necessary spark another rebound in house prices.

“There’s still a few other hurdles in the market that will probably help to temper that upside,” he said. “We know that even if interest rates do come down, they’re coming down from fairly high levels.”

Bloomberg Economics anticipates property price gains will peter out, particularly in Sydney, where housing is becoming increasingly unaffordable with the median home value A$1.13 million ($736,534).