Markets Overview
- ASX SPI 200 futures down 0.6% to 7,983.00
- Dow Average up 0.6% to 41,198.08
- Aussie little changed at 0.6729 per US$
- US 10-year yield little changed at 4.1556%
- Australia 3-year bond yield little changed at 3.97%
- Australia 10-year bond yield rose 0.4 bps to 4.25%
- Gold spot down 0.4% to $2,458.77
- Brent futures up 1.7% to $85.17/bbl
Economic Events
- 11:30: (AU) June Full Time Employment Change, prior 41,700
- 11:30: (AU) June Part Time Employment Change, prior -2,100
- 11:30: (AU) June Employment Change, est. 20,000, prior 39,700
- 11:30: (AU) June Participation Rate, est. 66.8%, prior 66.8%
- 11:30: (AU) June Unemployment Rate, est. 4.1%, prior 4.0%
Asian equities were set for early declines following a selloff in technology stocks on concerns the US would impose tighter restrictions on chip sales to China.
Equity futures for Japan, Australia and Hong Kong all declined, with Tokyo contracts falling 2%, weighed down by a stronger yen and further fallout from heavy selling in chipmakers around the world. The S&P 500 fell 1.4% while the Nasdaq dropped 2.9%, its worst day since 2022.
US chip giants Nvidia Corp., Advanced Micro Devices Inc. and Broadcom Inc. drove a closely watched semiconductor gauge down almost 7% — the biggest slide since 2020 — while in Europe, ASML Holding NV tumbled 11% even after the Dutch giant reported strong orders. A Wednesday plunge in Tokyo Electron Ltd. led losses in the Nikkei 225 Stock Average.
The Biden administration told allies it’s considering severe curbs if companies like Tokyo Electron and ASML keep giving China access to advanced semiconductor technology. The US is also weighing more sanctions on specific Chinese chip firms linked to Huawei Technologies Co.
The possibility of new chip restrictions “could indeed create the kind of selling that could be the catalyst for a tradable correction in the stock market,” said Matt Maley at Miller Tabak + Co. “Broad indices have become very overbought.”
The bond market saw small moves Wednesday. The Federal Reserve’s Beige Book showed slight economic growth and cooling inflation. Fed Governor Christopher Waller said the Fed is getting “closer” to cutting rates, but is not there yet.
Other News
Australian Retirement Trust, the nation’s second-largest pension, agreed to merge with smaller rival Qantas Super, in the latest sign of mega-funds ramping up their domination of the A$3.9 trillion ($2.6 trillion) industry.
The merger will see ART, with almost A$300 billion under management, add another A$9 billion of assets to its books, it said in a statement Wednesday. Qantas Super was formed 85 years ago as the pension fund of the national carrier.
Australia’s pension pool is forecast to top A$13.6 trillion by 2048, according to analysis by Mercer. It sees a dozen funds controlling more than A$100 billion each by 2028, driven by mergers, organic growth and investment performance.
The industry’s regulator, the Australian Prudential Regulation Authority, has said it strongly supports consolidation, bolstered by an annual performance test that’s shone a spotlight on fees and performance. Still, deals have been relatively quiet lately given the cost and complexity of merging funds.
Qantas Super, with 26,000 members, said last September that it was exploring merger options. ART, which already has 2.3 million members, completed mergers with four smaller funds last financial year, boosting its assets by A$19 billion.
ART said the merger with Qantas Super was subject to further assessments to make sure it was in the best interests of members.
