Markets Overview

  • ASX SPI 200 futures down 0.3% to 7,822.00
  • Dow Average little changed at 38,459.08
  • Aussie up 0.4% to 0.6537 per US$
  • US 10-year yield rose 4.3bps to 4.5865%
  • Australia 3-year bond yield rose 14 bps to 3.83%
  • Australia 10-year bond yield rose 14 bps to 4.26%
  • Gold spot up 1.6% to $2,372.21
  • Brent futures down 0.3% to $90.18/bbl

Economic Events

The world’s largest technology companies drove a rebound in stocks, with traders bracing for a deluge of results from Corporate America that will test this year’s $4 trillion rally.

Earnings season kicks into full swing Friday, with JPMorgan Chase & Co., Wells Fargo & Co. and Citigroup Inc. reporting their numbers. A solid economy is expected to fuel a rise in profit growth for S&P 500 companies — and strong margins from big tech will be a key driver. Also helping sentiment Thursday was an inflation report that trailed estimates a day after a hot price reading curbed bets on Federal Reserve rate cuts.

The S&P 500 hovered near 5,200, while the Nasdaq 100 added over 1.5%. Alphabet Inc. got closer to the $2 trillion mark, Inc. hit a record high and Apple Inc. jumped on news it plans to overhaul its Mac line. Financial shares came under pressure, with Morgan Stanley tumbling on a news report regulators are probing its wealth arm.

Treasury 10-year yields rose four basis points to 4.58%. A sale of 30-year bonds garnered lackluster demand.

Other News

Australian fund managers had a challenging year in 2023, with private capital fundraising plunging 43% to A$10 billion as higher interest rates and tough lending markets cooled appetite for deploying capital, according to the UK-based research firm Preqin Ltd.

A slowdown in fundraising in Australia highlights the ongoing repercussions of aggressive interest rate hikes by major central banks that have led to increased borrowing costs and raised concerns about debt defaults.

Some 37 Australia-focused funds raised capital last year, with the average fund size at a record A$271 million. The five largest funds accounted for 61.2% of the total as investors were more cautious and selected fewer but more experienced asset managers, according to the report.

The top five funds by assets were:

  • A$2 billion Qualitas Construction Debt Fund II
  • A$1.4 billion Pacific Equity Partners Secure Assets Funds II
  • A$1 billion Crescent Capital Partners VII
  • A$700 million Enhanced Value Partnership Fund
  • A$665 million Blackbird Ventures 2022 Follow-on Fund.

Private credit gained popularity as the floating rate nature of the loans provided investors with better returns in the high interest rate environment. Assets with closed-end funds more than doubled from A$700 million in 2020 to A$1.8 billion as of June 2023.

Overall, private credit assets in Australia rose 33% to A$139 billion during the 18 months through June 2023, with 2021 and 2022 accounting for the bulk of the fundraising.

Last year’s volume was still robust when compared to the five-year mean of A$8.1 billion for the 2015-2019 pre-Covid years, according to Preqin. The real estate sector made up the largest share of assets at A$55.7 billion, followed by private equity at A$45.5 billion and venture capital at A$20 billion.

The findings were published in Preqin’s Australia Private Capital Yearbook 2024, a joint effort with the Australian Investment Council. The report only captures data for closed-end funds.