Markets Overview

  • ASX SPI 200 futures up 0.2% to 7,693.00
  • Dow Average up 0.7% to 38,239.98
  • Aussie up 0.5% to 0.6449 per US$
  • US 10-year yield fell 1.2bps to 4.6085%
  • Australia 3-year bond yield rose 5.9 bps to 3.89%
  • Australia 10-year bond yield rose 6.3 bps to 4.32%
  • Gold spot down 2.7% to $2,326.62
  • Brent futures down 0.1% to $87.19/bbl

Economic Events

  • 09:00: (AU) April Judo Bank Australia PMI Servic, prior 54.4
  • 09:00: (AU) April Judo Bank Australia PMI Mfg, prior 47.3
  • 09:00: (AU) April Judo Bank Australia PMI Compos, prior 53.3

Asian stocks were poised to follow their Wall Street peers higher after US shares rebounded from a $2 trillion selloff on optimism big tech leaders will announce hefty profits this week.

Futures showed equities in Japan and Hong Kong may rise as much as 1%, while Australian shares are set to edge higher. That’s after the S&P 500 topped 5,000 — halting a six-day rout — while the Nasdaq 100 rose 1%, with Nvidia Corp. leading gains in big tech. Apple Inc. was named a top pick for 2024 at Bank of America Corp. on optimism over its upcoming results.

Investors are waiting to see if earnings will meet the lofty expectations for artificial intelligence this week when about 180 companies in the S&P 500 — representing over 40% of the gauge’s market capitalization — are due to report their results. Stakes are high for the “Magnificent Seven” megacaps, whose profits are forecast to rise nearly 40% from a year ago, according to Bloomberg Intelligence. The focus on earnings comes after a rout fueled by geopolitical fears and signals the Federal Reserve will be in no rush to cut rates.

Treasuries wavered ahead of a flurry of bond auctions that will test investors’ appetite after yields hit the highest in 2024. Investors were encouraged as some Middle East tensions eased, although Israeli Prime Minister Benjamin Netanyahu’s pledge to “increase the military and diplomatic pressure” on Hamas suggested an assault on the Gazan city of Rafah may be imminent.

Oil continued to fall in early Asian trading, mainly due to easing geopolitical tensions. Gold opened steady after tumbling 2.7% on Monday as haven demand waned.

In Asia, focus returns to China’s role as a major lender to developing nations amid a report the head of the central bank wants creditors engaged in debt restructurings to agree on how to fairly share the burden of relief. In Japan, the yen is facing growing risks it will rebound against the dollar because trader positions betting it will weaken have become stretched, reaching record levels.

Other News

Australian Prime Minister Anthony Albanese is struggling to build support for his government one year out from a likely election, even as it received strong backing for a new industry policy to bolster domestic green energy and high-tech manufacturing.

The latest Newspoll survey released by The Australian newspaper showed the center-left government’s rating was stable at 51%, on a two-party preferred basis, just narrowly ahead of the Liberal-National opposition at 49%.

A separate poll conducted by Resolve found support for Labor had fallen to its lowest level since the 2022 election. It showed that 55% of respondents said they were on the brink of struggling to meet their financial commitments.

Many Australians are caught in a pincer of rising prices and elevated borrowing costs that are stretching their finances, particularly with the nation’s household debt among the world’s highest. The government has been banking on tax cuts and interest-rate reductions to help restore its standing; however, persistent inflation strength may mean the Reserve Bank is unable to cut this year.

Newspoll showed Albanese maintained a net negative approval rating, with overall support for his performance at minus 6, although that has steadily improved from minus 15 recorded at the end of 2023.

Australia is due to hold an election by May 2025, and despite the weakening of its rating, Albanese’s Labor party is favored to win the ballot even if it’s forced into minority government with the support of independent lawmakers.

Australia’s inflation data for the first quarter of 2024 will be released on Wednesday and economists predict it slowed to an annual 3.5% from 4.1%. The RBA aims to keep the CPI between 2-3%.

Labor’s slim poll lead comes despite a positive response by voters to Albanese’s plans for a Future Made in Australia Act, designed to stimulate domestic manufacturing and high-tech industry in a similar fashion to the US’s Inflation Reduction Act.

In total, 56% said Australia should be actively investing in helping the economy develop new local industries and clean energy jobs, according to Newspoll, while 38% said they wanted to see reduced energy costs to promote growth.

(Bloomberg)