Markets Overview

  • ASX SPI 200 futures up 0.2% to 7,830.00
  • Dow Average little changed at 38,884.26
  • Aussie down 0.4% to 0.6598 per US$
  • US 10-year yield fell 3.0bps to 4.4570%
  • Australia 3-year bond yield fell 11 bps to 3.92%
  • Australia 10-year bond yield fell 7.4 bps to 4.31%
  • Gold spot down 0.4% to $2,314.18
  • Brent futures down 0.3% to $83.10/bbl

Economic Events

  • 11:00: (AU) Australia to Sell A$800 Million 3.25% 2029 Bonds

The rally that has powered stocks in May struggled gain much traction on Tuesday, with investors split on whether the market can sustain the advance given all the economic crosscurrents.

Equities are set for a consolidation amid stretched positioning, according to JPMorgan Chase & Co. strategists. Meantime, a pair of contrarian sentiment indicators from Bank of America Corp. and Citigroup Inc. are on the cusp of levels that say it’s time to snap up shares. And Goldman Sachs Group Inc. said Commodity Trading Advisors have lifted their stock exposure and are expected to keep buying regardless of the market direction this week.

Stocks have been trying to make a comeback after April’s rout, with gains fueled by prospects of Federal Reserve rate cuts and solid earnings. While the S&P 500 recently broke above a key technical level, Matt Maley at Miller Tabak + Co. says he’d like to see a bit more upside follow-through to confirm the “break.”

The S&P 500 briefly hit 5,200. Treasury 10-year yields fell three basis points to 4.45%. A $58 billion sale of three-year notes garnered solid demand. This week’s offerings also include $42 billion of 10-year notes Wednesday and $25 billion of 30-year bonds Thursday.

Other News

China accused an Australian military aircraft of conducting dangerous maneuvers, escalating a dispute over a recent incident involving the nations’ two militaries.

“What truly happened was an Australian military aircraft deliberately flew within close range of China’s airspace in a provocative move that endangered China’s maritime air security in the name of enforcing a UN Security Council resolution,” Foreign Ministry spokesman Lin Jian said at a regular press briefing on Tuesday.

Australia’s Defence Department said earlier that a People’s Liberation Army aircraft intercepted one of its helicopters in the Yellow Sea on May 4 and “released flares along the flight path.” But Lin said the Chinese aircraft took “necessary measures” to alert the Australian chopper. He added that Beijing lodged a “serious protest” with Australia.

China’s Defense Ministry also said in a statement on Tuesday its actions were reasonable and safe, and accused the Australian helicopter of conducting reconnaissance of military training.

China’s response comes after Prime Minister Anthony Albanese said Australia had expressed its concern to Beijing through diplomatic channels, describing the incident as both “unprofessional” and “unacceptable.”

Albanese said Australian defense personnel shouldn’t be at risk when they’re “going about their job.” The helicopter was operating from an Australian naval vessel enforcing United Nations sanctions against North Korea, Australia’s Department of Defence said in a statement.

The incident came after Australia’s chief of navy, Vice Admiral Mark Hammond, met with the head of China’s navy, Admiral Hu Zhongming, at a naval symposium last month in Qingdao.

Hammond stressed the importance of “safe and professional behavior” between the two navies, according to Australia’s Department of Defence. He mentioned an incident in November where two Australian navy divers were injured by sonar pulses from a Chinese naval vessel.

The Chinese reaction on Tuesday was similar to how Beijing responded to the earlier incident. Back then, China told Australia to “stop making trouble in front of China’s doorsteps and work with China to preserve the momentum of improving and growing China-Australia ties.”

It followed up by calling the Australian comments “irresponsible accusations.”