Markets Overview

  • ASX SPI 200 futures down 0.4% to 8,281.00
  • Dow Average up 0.6% to 43,988.99
  • Aussie down 1.4% to 0.6584 per US$
  • US 10-year yield fell 2.2bps to 4.3043%
  • Australia 3-year bond yield fell 4.7 bps to 4.08%
  • Australia 10-year bond yield fell 6 bps to 4.58%
  • Gold spot down 0.8% to $2,684.77
  • Brent futures down 2.3% to $73.87/bbl

Economic Events

Asian stocks may struggle in early trading after Chinese economic measures underwhelmed and the release of anemic inflation data over the weekend. Bitcoin topped $80,000 after President-elect Donald Trump took a clean sweep of the seven US battleground states.

Equity futures from Sydney to Tokyo and Hong Kong signal losses on Monday after China’s 10 trillion yuan ($1.4 billion) plan to help local governments deal with hidden debt stopped short of including new measures to boost domestic demand. The S&P 500 rose 0.4% on Friday as US stocks capped their best week this year in anticipation of Trump’s pro-growth agenda.

A softer start is expected in Asia after the region’s stocks jumped 2.4% last week amid improved sentiment following the Federal Reserve’s rate cut and hopes for more stimulus in China. Investors are now shifting to assess how quickly Trump will implement his fiscal and protectionist trade policies, including proposed tariffs on China.

“The market’s next move will hinge on whether Trump prioritizes cutting taxes or raising tariffs, each having vastly different impact,” Tony Sycamore, an analyst at IG Markets in Sydney, wrote in a note. “This clarification may still be months away and it’s worth remembering that back in 2016, Trump’s first move was to cut taxes which sent stock markets surging before tariffs on China caused headwinds.”

Sentiment toward China is faltering as foreign direct investment slumps amid geopolitical tensions, competition from domestic industries and concerns over the nation’s economic outlook. Consumer inflation eased closer to zero in October, suggesting the government’s latest round of stimulus is far from sufficient to free the economy from the grip of deflation.

“Many feel that China is keeping its tactical powder in play for such time as the Trump-China tariff negotiations build, and they can respond in a more targeted fashion to stem the likely economic fallout,” Chris Weston, head of research at Pepperstone Group in Melbourne wrote in a note. “In the short-term, however, it does suggest downside risk to China/Hong Kong equity and the yuan.”

The dollar edged higher against major peers in early Asian trading, extending last week’s gain amid concerns that Trump’s fiscal policies will stoke inflation. While the US Treasury yield curve flattened Friday, firms including BlackRock, JPMorgan Chase, and TCW Group are warning that the bond market selloff is likely far from over.

Other News

ANZ Group Holdings Ltd. cut Chief Executive Officer Shayne Elliott’s bonus by nearly half after a series of scandals in the Australian lender’s markets division, with the veteran banker saying his tenure is getting “clearly closer to the end.”

Elliott’s bonus for fiscal year 2024 was cut by A$1.1 million ($731,500), in large part due to the missteps that rocked the bank earlier in the year. The board, which he also sits on, is planning for the possible conclusion of his nine-year stint at the helm, he said in an interview.

The next CEO needs to have a strong sense of social responsibility, according to Elliott, who’s not on a fixed contract. “You need somebody who’s adept and thoughtful about that social license more broadly,” Elliott said following full-year results on Friday. “I think that idea wasn’t always on the list.”

ANZ has been dogged by a series of controversies in its markets unit that include allegations over inappropriate workplace conduct. There are also separate ongoing reviews into trading practices that have led to investigations by The Australian Securities and Investments Commission and an independent audit to satisfy the Australian Prudential Regulation Authority.

Australia’s second-largest bank by assets has not committed to publicly releasing the results of those reviews, Elliott said, adding he would decide once the bank had the findings.

Traders Misbehaving for Years Make Clean-Up at ANZ a Tough Job

Executive bonuses have suffered as a result of the scandal, ANZ’s latest annual report shows. Elliott’s short-term variable remuneration almost halved to A$1.3 million from A$2.4 million the previous financial year. For Mark Whelan, the head of institutional banking, his payout was similarly slashed to A$595,000 from A$1.46 million.

Its full-year results also show the headwinds for the overall business. ANZ’s profits missed estimates amid intense competition in the mortgage market, and will have to contend with a lower interest rate environment.

Elliott first joined ANZ in 2009 to head the institutional division and the 61-year-old New Zealander was appointed chief financial officer in 2012. As CEO four years later, one of Elliott’s first key tasks was to guide the bank through a public inquiry into Australia’s financial sector. The aftermath of that saw bonuses scrapped for frontline staff at ANZ as the wide-ranging inquiry unearthed years of wrongdoing in the industry.

The banking world is more “highly regulated, highly politicized” than it was more than decade ago, Elliott said. “In days gone by, it would’ve been lending, credit risk management. Those things are still really important but actually more and more it’s that social license side that matters,” he said, citing climate change, good customer outcomes, cybersecurity and scams among the priorities to tackle.

(Bloomberg)