Markets Overview

  • ASX SPI 200 futures down 0.5% to 7,737.00
  • Dow Average down 0.1% to 39,118.86
  • Aussie up 0.5% to 0.6682 per US$
  • US 10-year yield rose 11.0bps to 4.3961%
  • Australia 3-year bond yield fell 9 bps to 4.08%
  • Australia 10-year bond yield fell 9.9 bps to 4.31%
  • Gold spot little changed at $2,326.75
  • Brent futures down 0.3% to $85.00/bbl

Economic Events

  • 09:00: (AU) June Judo Bank Australia PMI Mfg, prior 47.5
  • 11:00: (AU) June Melbourne Institute Inflation, prior 0.3%
  • 11:00: (AU) June Melbourne Institute Inflation, prior 3.1%
  • 11:30: (AU) June ANZ-Indeed Job Advertisements , prior -2.1%

The stock market waned in the final stretch of a solid quarter, with traders keeping a close eye on any news regarding the US presidential race and remaining cautious ahead of Sunday’s elections in France.

Traders are rearranging their positions in the aftermath of the debate between Joe Biden and Donald Trump. Biden’s shaky performance boosted sentiment around Trump’s odds for securing a second term in the White House. Private prisons, oil and health-insurance firms — some of the groups that would potentially win from another Trump presidency — rallied, while renewable energy and pot stocks sank. Treasury curve-steepening also followed the presidential debate.

After gaining almost 1% earlier Friday, the S&P 500 fell to around 5,460. Long-term Treasuries largely underperformed shorter maturities. Bonds had earlier gained as inflation data bolstered bets on Federal Reserve rate cuts. The dollar edged lower, while capping its sixth-straight week of gains.

Other News

Sydney home values climbed to a record in June as strong demand and low supply levels overshadowed increasing pain from high borrowing costs.

Bellwether Sydney’s dwelling values added 0.5% in the month, taking the median to a fresh high of A$1.17 million, property consultancy CoreLogic Inc. said in a report. Overall, dwelling values rose 0.7% in Australia’s major cities. Melbourne fell 0.2% and Perth was the best performing capital with a 2% gain.

“The persistent growth comes despite an array of downside risks including high rates, cost-of-living pressures, affordability challenges and tight credit policy,” said Tim Lawless, research director at CoreLogic. “The housing market resilience comes back to tight supply levels which are keeping upwards pressure on values.”

Higher interest rates, a shortage of homes and booming population growth have caused a housing crisis in large parts of Australia. The problem is particularly acute in Sydney where buyers are being priced out of the market given an average home costs 13-times income.

CoreLogic’s national home value index has advanced 36.8% since the onset of Covid-19, despite the Reserve Bank of Australia’s aggressive rate hikes, with Sydney climbing 28.2% during that period.

The number homes advertised for sale in capital cities in the past four weeks was almost 18% below the previous five-year average, the report said. New listings tracked 12% higher than a year ago, with stock absorbed almost as soon as it’s added to the market.

“The rise in new listings could be a signal that more homeowners are motivated or needing to sell,” Lawless said.

Bloomberg Economics expects the outlook to weaken as more sellers start to list their properties, particularly in Sydney and Melbourne.

“The return to a more balanced market, along with elevated interest rates, is likely to suppress price hike,” economist James McIntyre said in a note. “Gains should remain lackluster in Sydney and Melbourne, where affordability is a question for many buyers.”