Markets Overview

  • ASX SPI 200 futures down 1.8% to 7,924.00
  • Dow Average down 1.2% to 40,347.97
  • Aussie down 0.6% to 0.6502 per US$
  • US 10-year yield fell 5.6bps to 3.9741%
  • Australia 3-year bond yield fell 2 bps to 3.74%
  • Australia 10-year bond yield fell 2.8 bps to 4.09%
  • Gold spot little changed at $2,446.40
  • Brent futures down 1.0% to $80.06/bbl

 

Economic Events

  • 11:00: (AU) Australia to Sell A$600 Million 3.75% 2034 Bonds
  • 11:30: (AU) June Owner-Occupier Loan Value MoM, prior -2.0%
  • 11:30: (AU) June Investor Loan Value MoM, prior -1.3%
  • 11:30: (AU) June Home Loans Value MoM, est. 0.1%, prior -1.7%
  • 11:30: (AU) 2Q PPI QoQ, prior 0.9%
  • 11:30: (AU) 2Q PPI YoY, prior 4.3%

Asian equities were primed for selling Friday following declines on Wall Street that reflected unease on the health of the US economy and sent Treasuries higher.

Equity futures for Japan, Australia and Hong Kong all fell, with contracts for Tokyo’s Nikkei 225 benchmark down by more than 3% early Friday. The yen clung to its rally from earlier in the week, keeping pressure on Japanese stocks, which can be vulnerable to swings in the currency. Both the S&P 500 index and Nasdaq 100 index fell Thursday, erasing gains from the prior session. Contracts for US stocks slipped in Asian trading.

Declines for equities partly echoed signs of strain in the US economy and the likely timing of Federal Reserve interest rate cuts. Thursday data showed US unemployment claims hit an almost one-year high while manufacturing shrank. The unease prompted swaps traders to increase the number of anticipated Fed cuts this year to three from two.

Jobs data due later Friday will provide further clarity and is expected to a show a slowing in new roles added to the economy.

“Markets are approaching panic mode as many economic factors converge, supporting a drift away from risk assets,” said Jose Torres at Interactive Brokers. “The headwinds for this market are just too stormy, especially considering that equities are priced for perfection.”

Earnings from some of the largest US companies provided a further headwind for equities. Intel Corp. said its third-quarter revenue will disappoint and announced more than 15,000 job cuts. Amazon.com Inc projected profits that missed analysts’ estimates as it ramped up spending to meet demand for artificial intelligence services. Shares in both fell in after hours trading Thursday.

The rally in Treasuries dragged 10-year yields five basis points lower to below 4% for the first time since February. The US two-year yield, which is more sensitive to monetary policy, fell 11 basis points to levels not seen since January.

An index of dollar strength rallied Thursday to partly unwind losses from the prior session. The yen was little changed, holding on to a rally this week that has pushed the currency to around 149 per dollar. The pound slid Thursday after the Bank of England cut rates and signaled further cautious reductions ahead.

In Asia, data set for release includes inflation in South Korea, producer prices in Australia and Singapore PMI for July.