Markets Overview

  • ASX SPI 200 futures little changed at 7,575.00
  • Dow Average up 0.2% to 37,903.29
  • Aussie up 0.8% to 0.6524 per US$
  • US 10-year yield fell 5.1bps to 4.6283%
  • Australia 3-year bond yield rose 8 bps to 4.12%
  • Australia 10-year bond yield rose 8.6 bps to 4.51%
  • Gold spot up 1.4% to $2,318.08
  • Brent futures down 3.3% to $83.51/bbl

Economic Events

  • 10:30: (AU) Australia to Sell A$1 Billion 84-Day Bills
  • 10:30: (AU) Australia to Sell A$1 Billion 133-Day Bills
  • 11:30: (AU) March Exports MoM, prior -2.2%
  • 11:30: (AU) March Private Sector Houses MoM, prior 10.7%
  • 11:30: (AU) March Imports MoM, prior 4.8%
  • 11:30: (AU) March International Trade Balance, est. A$7.3b, prior A$7.28b
  • 11:30: (AU) March Building Approvals MoM, est. 3.4%, prior -1.9%

Bonds rallied after Jerome Powell downplayed the possibility of interest-rate hikes and the Federal Reserve said it will shrink its balance sheet at a slower pace to ease strains in money markets.

Treasuries climbed across the curve, with two-year yields dropping below 5%. Swap traders boosted bets on policy easing in 2024. At one point, markets were headed for their biggest cross-asset surge on a Fed day this year. Moves abated toward the close, with the S&P 500 turning lower as chipmakers plunged in the final hour of trading. The yen soared, fueling speculation Japan could be intervening to support the currency.

US 10-year yields fell five basis points to 4.63%. In a volatile session, the S&P 500 extended this week’s losses — with traders seeing Friday’s jobs report as the next big catalyst.

Other News

South Korea is discussing participation in the Aukus security pact as a research partner, Defense Minister Shin Wonsik said, the latest major country in the Indo-Pacific to examine cooperating with the US-led group.

At an annual meeting of South Korean and Australian officials, Shin said there were discussions about how Seoul could contribute to Pillar II of the Aukus agreement, which focuses on research collaboration in areas of strategic significance such as artificial intelligence and quantum computing.

“We welcome that Aukus members are considering Korea as an Aukus Pillar II partner,” Shin said at a news conference in Melbourne on Wednesday. “Korea’s defense science and technology capabilities will contribute to the peace and stability of the development of Aukus Pillar II and regional peace.” The minister’s comments came via a translator.

South Korea is the latest country to explore the possibility of working with Aukus, with both Japan and New Zealand flagging their interest in recent months.

Aukus is a security partnership signed by Australia, the UK and the US in September 2021, designed to boost all three countries’ defense and research capabilities at a time of growing competition with China.

Under the first pillar of the Aukus pact, the UK and US will work with Australia to help Canberra field a fleet of nuclear-powered submarines by the 2030s. However, it is the strategic research partnerships under Pillar II of Aukus that interests regional partners including Seoul.

While Japan, New Zealand and now South Korea have all expressed interest in working together with Aukus partners, Australia’s Prime Minister Anthony Albanese has ruled out any suggestion of formally expanding the pact beyond its initial three members in the short term.