Markets Overview
- ASX SPI 200 futures up 0.4% to 8,280.00
- Dow Average up 1.3% to 42,025.19
- Aussie up 0.8% to 0.6815 per US$
- US 10-year yield rose 1.1bps to 3.7150%
- Australia 3-year bond yield rose 6.9 bps to 3.53%
- Australia 10-year bond yield rose 6.5 bps to 3.93%
- Gold spot up 1.1% to $2,586.74
- Brent futures up 1.6% to $74.84/bbl
Economic Events
- 11:00: (AU) Australia to Sell A$500 Million 3.25% 2029 Bonds
Asia was set to extend a rally that pushed global stocks to fresh highs as jobs data supported the view the Federal Reserve can engineer a soft landing for the US economy. The yen was steady as traders prepare for inflation data and an interest rate decision in Japan.
Equity futures for Japan, Australia and Hong Kong all climbed Friday after US shares set new peaks, propelling a gauge of global stocks to a record. The S&P 500 rose 1.7% and the Nasdaq 100 added 2.6%. Treasury yields were little changed Thursday while an index of dollar strength fell slightly.
A drop in US jobless claims to the lowest since May signaled the labor market remains healthy despite a slowdown in hiring. This added a boost to risk appetite and eased concerns the Fed may have been too slow to trim borrowing costs when it rate cuts by 50 basis points on Wednesday.
“Despite some volatility after the Fed’s rate cut, the S&P 500’s bullish trend remains intact,” said Fawad Razaqzada at City Index and Forex.com. “The Fed’s decision to deliver a 50-basis point rate cut was largely welcomed by investors. The move was seen as a bold but necessary step to ease economic concerns without sending panic signals reminiscent of the 2008 financial crisis.”
Gains for the S&P 500 on Thursday pushed the benchmark to its 39th record in 2024 and extending this year’s surge to about 20%. Tech led gains, while defensive industries underperformed. The Russell 2000 of small caps rose 2.1%. In late hours, FedEx Corp. tumbled on a bearish outlook. Nike Inc. surged after saying longtime executive Elliott Hill is coming out of retirement to replace John Donahoe as chief executive officer.
While a relative sense of calm prevailed, traders also braced for a quarterly episode known as “triple witching” in which derivatives contracts tied to stocks, index options and futures will mature — potentially amplifying market moves. About $5.1 trillion are set to expire Friday, according to an estimate from Asym 500. The options expiry coincides with the rebalancing of benchmark indexes.
Meantime, the latest MLIV Pulse survey showed that 57% of the 173 respondents believe a rotation into value stocks is likely to accelerate now that the Fed started the easing cycle.
The majority of survey participants, 75%, expect the US to manage a soft landing after the 50 basis-point rate cut, but even those favor value over AI stocks, according to the poll conducted immediately after the decision. Value was especially popular among those expecting the US to hit a recession.
In commodities, gold climbed 1.1% Thursday, while West Texas Intermediate, the US oil price, advanced 1.5% on improving risk sentiment following the Fed’s rate cut.
Other News
he Australian Senate Thursday referred an omnibus tax bill, which includes an increase to the foreign resident capital gains withholding rate, to a committee of lawmakers for inquiry.
The Treasury Laws Amendment Bill 2024 was referred to the Senate Economics Legislation Committee, a group of lawmakers who evaluate proposed government spending and economic policies.
The legislation, tabled by the House on Sept. 12, includes a provision to amend Australia’s tax code increasing the withholding tax rate on foreign resident capital gains from 12.5% to 15%.
It also includes a provision that would remove a number of exclusions and thresholds, including a A$750,000 ($496,950) transaction threshold.
- The amendment comes after the Treasury consulted on the increase from July to August.
- The increase would take effect from Jan. 1, 2025.
- The committee has until Oct. 24 to complete its inquiry and issue a report on the legislation.
