Markets Overview
- ASX SPI 200 futures up 0.2% to 8,349.00
- Dow Average down 0.2% to 43,378.40
- Aussie up 0.7% to 0.6506 per US$
- US 10-year yield fell 2.6bps to 4.4138%
- Australia 3-year bond yield fell 4.9 bps to 4.12%
- Australia 10-year bond yield fell 3.5 bps to 4.60%
- Gold spot up 1.8% to $2,610.13
- Brent futures up 3.2% to $73.29/bbl
Economic Events
- 11:30: (AU) RBA Minutes of Nov. Policy Meeting
Stocks climbed as Treasuries halted a selloff that drove 10-year yields near 4.5%, with traders keeping a close eye on news around President-elect Donald Trump’s administration.
The Nasdaq 100 outperformed after its longest rout since January, with Tesla Inc. up 5.6% on a news report Trump’s transition team have told advisers they plan to make a federal framework for fully self-driving vehicles one of the Transportation Department’s priorities. Nvidia Corp., which reports results this week, fell. Bonds rose across the US curve, reversing a move that earlier drove 30-year yields to their May highs. Bitcoin topped $91,000.
“Traders appear to be gauging the potential impact of a new Trump administration’s policies on the economy, and the possibility that the Fed may slow down its rate-cutting campaign,” said Chris Larkin at E*Trade from Morgan Stanley. “With a relatively light economic calendar this week, the focus will shift to earnings — especially Nvidia’s, which have the potential to dictate the market’s short-term momentum.”
The S&P 500 rose 0.4%. The Nasdaq 100 climbed 0.7%. The Dow Jones Industrial Average fell 0.1%.
Treasury 10-year yields declined three basis points to 4.41%. The Bloomberg Dollar Spot Index slid 0.4%.
Other News
Goldman Sachs Group Inc. lowered its forecast for Australia’s economic growth in 2025, pointing to likely “negative spillovers” from the incoming Trump administration’s expected increase in tariffs on China.
Goldman now sees gross domestic product rising 1.8% next year, compared with 2% seen previously, reflecting the anticipated impact on exports from Australia’s biggest trading partner, according to its Australia and New Zealand 2025 Outlook, released Monday. President-elect Donald Trump has threatened to implement 60% tariffs on exports from China as he seeks to protect US firms and jobs.
Australia’s growth has slowed to a crawl this year as elevated interest rates — currently at a 13-year high of 4.35% — have hurt consumer spending. Goldman is maintaining its “dovish” position that the Reserve Bank of Australia will start easing in February, earlier than many other economists and markets predict.
Goldman expects the central bank will cut at the first meeting next year and reach a terminal rate of 3.25% by November. Money markets don’t see the RBA easing until May.
“Our forecast is more dovish than market pricing and consensus expectations. On balance, we view higher US tariffs on China as having a dovish read-through for Australian rates,” economists led by Andrew Boak said in the report.
Australia is due to hold an election by May 2025 and new voter-friendly policies may further stimulate the economy, they said. The center-left Labor government has already announced a slew of measures to ease voter disquiet over rising living costs, including energy rebates, expanded rental assistance and reducing university student debt.
“We are mindful of upside risks from new fiscal stimulus ahead of next year’s federal election,” Goldman said.
In New Zealand, Goldman’s base case is for the central bank to continue to cut in 50 basis-point increments in November and February. It will then slow the pace to quarter-point reductions per meeting and reach a terminal rate of 3% in July 2025.
(Bloomberg)
