Markets Overview

  • ASX SPI 200 futures up 1.0% to 7,804.00
  • Dow Average little changed at 39,308.00
  • Aussie up 0.6% to 0.6705 per US$
  • US 10-year yield fell 7.3bps to 4.3587%
  • Australia 3-year bond yield rose 2 bps to 4.15%
  • Australia 10-year bond yield rose 1.9 bps to 4.43%
  • Gold spot up 1.1% to $2,356.23
  • Brent futures up 1.0% to $87.06/bbl

Economic Events

  • 10:30: (AU) Australia to Sell A$1 Billion 126-Day Bills
  • 10:30: (AU) Australia to Sell A$1 Billion 49-Day Bills
  • 11:30: (AU) May International Trade Balance, est. A$6.33b, prior A$6.55b
  • 11:30: (AU) May Exports MoM, prior -2.5%
  • 11:30: (AU) May Imports MoM, prior -7.2%

Shares in Asia were set to advance Thursday after US stocks touched a fresh peak as economic data supported the case for Federal Reserve rate cuts.

Equity futures for Japan, Australia and Hong Kong all drifted higher. The S&P rose 0.5% and the Nasdaq climbed 0.9% to both set new highs Wednesday in a shortened session ahead of a US holiday. Contracts for US stocks were steady in early Asian trading.

The moves were helped along by data that showed the services sector contracted at the fastest pace in four years while the labor market saw further signs of cooling.

Minutes from the June Fed policy meeting showed officials were awaiting evidence that inflation is cooling and were divided on how long to keep rates elevated.

Treasury 10-year yields dropped seven basis points to 4.36% Wednesday, weighing on an index of dollar strength. Swap traders projected almost two rate cuts in 2024, with the first in November — though bets on a September reduction increased.

In Asia, the yen was steady early Thursday after setting a fresh low since 1986 against the greenback for a third consecutive day as speculation persists that the Bank of Japan will tighten policy only gradually.

Chinese electric-car brands held on to their share of the slumping European EV market in May. Automakers like BYD Co. made up 8.7% of total EV sales, roughly on par with a year ago, as Chinese firms pressure European counterparts with new, inexpensive models. Economic data due for release in the region includes PMI figures for Hong Kong and trade for Australia.

Elsewhere, Britons prepared to head to the polls in a general election Thursday. Opinion polls give Keir Starmer’s Labour Party a lead of around 20 percentage points.

Investors will now keep an close eye on Friday’s US jobs report. Economists anticipate a 190,000 gain in June nonfarm payrolls — a step-down from the previous month — with the unemployment rate holding at 4%.

Other News

Australia’s corporate watchdog should be split in two and whistleblowers should receive compensation as part of reforms aimed at boosting its enforcement capabilities.

Those changes are among the 11 recommendations made in a Senate committee report into the Australian Securities and Investments Commission released Wednesday. They will allow a separate entity to focus on financial-services firms, while another oversees all other companies. Treasurer Jim Chalmers has yet to respond to the recommendations but said on Tuesday that he would examine the report.

Australian lawmakers have spent nearly two years examining what can be improved at the country’s corporate regulator, now under the stewardship of Chair Joe Longo, amid allegations its remit is too broad. Breaking the organization into an entity focused on policing banks and another focused on regulating non-financial companies will provide a more consistent approach to corporate regulation and law enforcement, according to Andrew Bragg, who chaired the committee behind the report.

“These measures, if adopted, would provide Australians with the protection and confidence which is sadly absent,” Bragg said in a statement. The committee uncovered “an organisation without transparency, few prosecutions, and a litany of cultural, structural and governance issues.”

ASIC will take time to consider the report, a spokesperson for the regulator said.

The findings follow public condemnation from former chair of the enforcement agency James Shipton who first suggested a breakup last year as part of a suite of reform proposals. He said the agency had become overburdened and underfunded.

Cases initiated from ASIC referrals dropped from 75% in 2018 to 19% in the last financial year, the national public prosecutors department revealed as part of the inquiry.

The impact to ASIC may ultimately remain limited unless the committee’s recommendations can get the support of Australia’s governing Labor party, which may choose not to adopt them, leaving any reform hinging on a change of government in the federal elections due by next May.

(Bloomberg)