Markets Overview

  • ASX SPI 200 futures up 0.2% to 7,850.00
  • Dow Average up 0.2% to 38,886.17
  • Aussie up 0.3% to 0.6667 per US$
  • US 10-year yield rose 1.2bps to 4.2870%
  • Australia 3-year bond yield fell 2.1 bps to 3.91%
  • Australia 10-year bond yield fell 1.9 bps to 4.23%
  • Gold spot up 0.9% to $2,375.69
  • Brent futures up 2.0% to $79.96/bbl

Economic Events

  • 11:30: (AU) April Household Spending YoY
  • 13:00: (AU) RBA’s Hauser-Fireside Chat
  • 16:30: (AU) May Foreign Reserves, prior A$89.8b

Asian stocks are poised for a tentative open on Friday as Wall Street wavered ahead of a key US jobs reading likely to guide the Federal Reserve’s policy outlook.

Equity futures in Australia and Hong Kong advanced modestly while those in Japan and mainland China slipped. The S&P 500 closed little changed, having stalled near all-time highs, as traders refrained from big bets ahead of the US non-farm payrolls data. Contracts for US shares were steady in early Asian trading. Australian yields edged lower.

In the run-up to the reading, markets waded through a raft of US data including jobless claims that topped estimates and labor costs which increased by less than previously reported. Friday’s report is expected to show the US added 180,000 jobs in May while the unemployment rate held steady.

Traders have escalated rate-cut bets in the past week, emboldened by the slew of softer-than-forecast US data, the Bank of Canada’s decision to ease monetary policy, and bets the ECB would be the next to cut — a move confirmed on Thursday. Treasury 10-year yields fluctuated near 4.29% while swap markets continued to pencil in the start of the Fed rating cut in November, with a strong likelihood of another reduction in December.

Other News

Australian home loans to property investors jumped for a third straight month in April, rising at a faster pace than owner-occupiers as surging residential rents make housing an even more attractive investment.

The value of new loans to home investors rose 5.6% to A$10.9 billion ($7.3 billion), to be up 36.1% compared with a year ago, data from the Australian Bureau of Statistics showed on Thursday.

“This likely reflects expectations of higher rental yields and the greater borrowing capacity of investors,” Mish Tan, head of finance statistics at the ABS, said in a statement.

The strongest markets were New South Wales and Queensland where investor lending climbed about 44% and 46%, respectively, since April 2023, the data showed.

Separate figures from property consultancy CoreLogic Inc. earlier this month showed rents advanced 8.9% in Sydney in May from a year ago and 9.7% in Melbourne. That compares with annual house price gains of 7.4% and 1.8% in the two biggest cities, respectively.

With rents climbing at a faster pace than home values, gross rental yields have risen to 3.56% across the eight capital cities — the highest since August 2019, CoreLogic data showed.

“For most investors, higher yields will be welcome considering variable interest rates for investor loans are averaging 6.7%,” CoreLogic research director Tim Lawless said. “Given the high cost of debt, a large portion of leveraged investors are probably recording a cash flow loss despite the substantial rise in rental income.”

Today’s data also showed the value of new loans to owner-occupiers, excluding first-home buyers, rose 4.7% in April to A$13.1 billion, up 18.8% from a year ago.