Markets Overview
- ASX SPI 200 futures up 0.4% to 8,170.00
- Dow Average up 0.7% to 42,052.19
- FTSE 100 up 0.8% to 8,177.15
- Euro little changed at $1.0882
- Aussie up 0.3% to 0.6601 per US$
- Kiwi down 0.2% to 0.5963 per US$
- US 10-year yield rose 9.9bps to 4.3836%
- Australia 3-year bond yield rose 3 bps to 4.05%
- Australia 10-year bond yield rose 3.4 bps to 4.54%
- Gold spot down 0.3% to $2,736.53
- Brent futures up 0.4% to $73.10/bbl
Economic Events
- 11:00: (AU) Australia to Sell A$700 Million 2.75% 2027 Bonds
- 11:00: (AU) Oct. Melbourne Institute Inflation, prior 0.1%
- 11:00: (AU) Oct. Melbourne Institute Inflation, prior 2.6%
- 11:30: (AU) Oct. ANZ-Indeed Job Advertisements , prior 1.6%
The dollar weakened as the latest raft of US presidential election polling data showed no clear advantage between Kamala Harris and Donald Trump. Asian stocks were primed for a muted open.
The greenback fell against the yen, pound, euro, Mexican peso, Australian dollar and New Zealand dollar in early trading, after strengthening Friday as Treasury yields climbed. Australian and New Zealand bond yields were little changed early Monday.
The weakening of the greenback was a sign to some that investors may be walking back confidence in a victory for Donald Trump. One element of the so-called Trump trade favors higher Treasury yields and a stronger US dollar.
“To the extent there was something to the ‘Trump trade’ last week, it is beating a bit of a retreat this morning,” said Ray Attrill, head of FX strategy at National Australia Bank Ltd. in Sydney.
Equity futures for Australian shares rose, while those for Hong Kong were slightly lower even as a gauge of US-listed Chinese stocks advanced Friday. The S&P 500 and Nasdaq 100 advanced Friday, helped along by robust earnings from the likes of Amazon.com and Intel Corp. Japanese markets are closed for a holiday, which means there will be no Treasuries trading in Asian hours.
Wall Street tried not to read too much into jobs data showing US hiring advanced at the slowest pace since 2020 in October while the unemployment rate remained low. The numbers were distorted by severe hurricanes and a major strike. The jobs report is the last major data point before the election.
Polls released Sunday show Harris and Trump poised for a photo finish, with voters narrowly split both nationally and across the pivotal swing states that will decide the election. One poll by the Des Moines Register showed Harris with a 47%-44% lead in Iowa — a state Trump has won in each of his prior elections. This was likely an outlier, but suggested the vice president could be making inroads with White voters in the Midwest.
Data set for release in Asia Monday includes HSBC PMI manufacturing figures for India and an interest rate decision in Pakistan.
Oil prices rose Friday for a third day. OPEC+ agreed to push back its December production increase by one month, the second delay to its plans to revive supply as prices continue to struggle amid a fragile economic outlook.
In China, officials unveiled steps to attract foreign money just days before US elections that have raised concern about the impact on the world’s second-biggest economy from a return of Donald Trump to the White House. Foreign individuals are now allowed to provide capital for publicly traded firms as strategic investors, the China Securities Regulatory Commission, the Commerce Ministry and four other regulators said in a statement late Friday.
Other News
Private credit lenders including Apollo Global Management-backed MaxCap Group and Pallas Capital are targeting a bigger slice of lending to Australia’s commercial property sector as banks curtail their exposure after tighter capital regulations.
“We are looking at a total commercial real estate market size of around A$500 billion and it’s a great opportunity for all the non-bank firms and private credit houses,” said Bruce Wan, head of research at MaxCap. “These avenues have helped non-bank lenders double their asset size in the last three years.”
Australia’s property sector is growing as a source of deals for private credit lenders as commercial real estate transactions rebound and local banks become more risk adverse to property exposure after regulators last year imposed stricter capital rules for development and construction loans. Global investors including Warburg Pincus and PGIM are joining local funds in targeting loans to Australian property firms, helping to make the nation a hot spot for the booming private credit industry.
In a sign of market confidence, Pallas Capital, a Sydney-based private-debt lender received a A$280 million ($184 million) loan from Goldman Sachs Group Inc. to refinance its flagship fund, according to the Australian firm’s chief investment officer Dan Gallen this week. Ares Management and Pallas have also provided financing to the A$500 million fund.
Goldman’s participation will lower the cost of funding for Pallas, Gallen said.
Double-digit returns have been luring investors. A senior property loan fund managed by MaxCap with most of its funds deployed in Australia had net returns of about 12% in the 12-month period through June, data from the company shows.
Still, like global peers, the rapid of growth of private credit is giving Australian regulators cause for concern. The Australian Securities and Investments Commission is setting up a specialized unit to engage with private markets, while the Australian Prudential Regulation Authority has repeatedly raised concerns about the frequency of valuations and disclosures for unlisted assets.
For now, the real estate market down under is rebounding as investors expect the sector to profit from lower borrowing costs in 2025, property consultant JLL said in a statement last month. Commercial real estate sales in Australia increased 48% to A$18.7 billion in the first nine months of the year, JLL said.
