Markets Overview

  • ASX SPI 200 futures down 0.6% to 7,746.00
  • Dow Average down 0.6% to 38,852.86
  • Aussie little changed at 0.6650 per US$
  • US 10-year yield rose 8.5bps to 4.5500%
  • Australia 3-year bond yield fell 1 bp to 3.95%
  • Australia 10-year bond yield fell 1.9 bps to 4.26%
  • Gold spot up 0.4% to $2,361.32
  • Brent futures up 1.8% to $84.57/bbl

Economic Events

  • 11:00: (AU) Australia to Sell A$600 Million 1.5% 2031 Bonds
  • 11:30: (AU) 1Q Construction Work Done, est. 0.5%, prior 0.7%
  • 11:30: (AU) April CPI YoY, est. 3.4%, prior 3.5%

Stocks in Asia were mostly set to decline after a US session dominated by a sell-off in bonds, with traders also weighing mixed economic data and remarks from Federal Reserve speakers for clues on the policy outlook.

Futures for equity benchmarks in Hong Kong and Sydney indicated lower opens, while those for Tokyo showed a slight advance. Treasuries fell after the US sold $70 billion of five-year notes at 4.553% — above the pre-auction level of 4.540%. An earlier offering of $69 billion in two-year notes also came on the soft side.

Just a few days before the Fed’s favorite price gauge, a report showed US consumer confidence unexpectedly rose in May — though recession expectations increased as well. US 10-year yields climbed eight basis points in Tuesday, the S&P 500 was little changed while the Nasdaq Composite closed above 17,000 for the first time ever.

Yields on Australian 10-year notes rose nine basis points in early trading on Wednesday and those for the New Zealand equivalent climbed seven points. The yen held near an almost 16-year low against the pound.

Other News

Australia’s Treasury department is seeking input on an increase in levies financial and insurance companies must pay to finance a top regulator.

The department opened a consultation Tuesday on the levies firms will pay to fund the Australian Prudential Regulation Authority’s budget in the 2024-24 financial year. The authority regulates banks, credit unions, and insurance companies.

The levy rates for banks, building societies, and credit unions—entities known as authorized deposit-taking institutions, or ADIs—will rise between 31% and 32.3%, a consultation document says. The rate will rise by 0.7% for life insurers and friendly societies, 2% for general insurers, and 34.6% for superannuation funds, or pensions, according to the document.

The rates are based on a percentage of reported assets.

ADIs are forecasted to pay A$106.5 million ($70.8 million), life insurance and friendly societies are expected to pay A$22.1 million ($14.7 million), general insurers will pay A$32.7 million ($21.7 million), and superannuation funds will pay A$73.7 million ($49 million) in the 2024-25 financial year, the document says.

The authority’s total levy requirement for the 2024-25 financial year is A$246.1 million ($163.7 million), an increase of A$23 million ($15.3 million) or 10.3% over the previous year. The levies will recover the majority of the authority’s expenses, the document says.

The levies are expected to raise A$294 million ($195.5 million) in total, with the remainder going to other government bodies like the Australian Taxation Office, it says.