Markets Overview

  • ASX SPI 200 futures down 0.5% to 7,902.00
  • Dow Average down 0.2% to 40,834.97
  • Aussie up 0.2% to 0.6747 per US$
  • US 10-year yield fell 6.4bps to 3.8067%
  • Australia 3-year bond yield rose 3.7 bps to 3.59%
  • Australia 10-year bond yield rose 3.3 bps to 3.95%
  • Gold spot up 0.4% to $2,513.64
  • Brent futures down 0.7% to $77.15/bbl

Economic Events

  • 09:00: (AU) Aug. Judo Bank Australia PMI Compos, prior 49.9
  • 10:30: (AU) July Westpac Leading Index MoM, prior 0%
  • 11:00: (AU) Australia to Sell A$800 Million 3% 2033 Bonds

Stocks in Asia are set to decline after a rally on Wall Street halted within striking distance of its all-time highs.

Futures pointed to drops of at least 0.5% in Tokyo, Hong Kong and Sydney after the US benchmark edged lower to end an eight-day winning streak. In stark contrast to the panic selling of early August, bullishness has been in overdrive on Wall Street, with nearly $16 billion in new long bets added to S&P 500 futures just last week, according to Citigroup Inc.

“The momentum guys are driving the bus,” said Kenny Polcari at SlateStone Wealth. “Now the volumes have been trending lower as we move into the end of the month. Moves will be and are exaggerated as a result. And I think the recent rally is proof of that exaggeration.”

At Miller Tabak, Matt Maley said it would be “healthy” if the equity market took a breather for a day or two.

Aside from flows and positioning, the recent rally was also fueled by bets the Federal Reserve will signal it’s getting closer to cutting rates, leading bond traders to take on record amounts of risk as they anticipate a Treasury market rally. In the countdown to Jerome Powell’s speech Friday in Jackson Hole, Wednesday’s US payrolls revisions are poised to capture Wall Street’s attention.

In Asia, policymakers in Indonesia and Thailand are tipped to keep interest rates unchanged on Wednesday as they weigh uncertainties over political transitions while awaiting the Fed’s imminent easing. Australian 10-year yields fell five basis points in early trading.

The S&P 500 fell below 5,600 Tuesday as Nvidia Corp. — which had rallied almost 25% in six days — led losses in megacaps. Treasury 10-year yields declined six basis points, while a Bloomberg gauge of the dollar fell for a third session, helping push the euro and pound to fresh highs for the year. Brent crude declined a third day on the back of a potential cease-fire in Gaza and mounting concern about the global demand outlook, while gold hit a fresh record high.