Markets Overview
- ASX SPI 200 futures down 0.2% to 8,501.00
- Dow Average little changed at 44,754.70
- Aussie little changed at 0.6481 per US$
- US 10-year yield rose 3.2bps to 4.2226%
- Australia 3-year bond yield fell 2 bps to 3.91%
- Australia 10-year bond yield fell 3 bps to 4.30%
- Gold spot little changed at $2,640.54
- Brent futures up 2.6% to $73.70/bbl
Economic Events
- 09:00: (AU) Nov. S&P Global Australia PMI Compo, prior 49.4
- 09:00: (AU) Nov. S&P Global Australia PMI Servi, prior 49.6
- 11:30: (AU) 3Q GDP YoY, est. 1.1%, prior 1.0%
- 11:30: (AU) 3Q GDP SA QoQ, est. 0.5%, prior 0.2%
A rally that drove stocks to a series of all-time highs showed signs of exhaustion, with investors awaiting this week’s key jobs data and Jerome Powell’s remarks for clues on whether the Federal Reserve will cut rates in December. Bonds and the dollar barely budged.
Wall Street also refrained from making riskier bets amid intense volatility in South Korean assets as President Yoon Suk Yeol said he will lift a martial law decree, just hours after his dramatic move imposing it. US equities struggled to make headway, following an $11 trillion surge that sent S&P 500 to its 54th record this year. Some traders noted that the relentless advance drove sentiment gauges toward extremes, with the benchmark hovering near overbought levels.
Positioning in S&P 500 futures is “completely one-sided,” according to Citigroup Inc.’s Chris Montagu.
“Things are getting extremely crowded on one side of the boat — the bullish side,” said Matt Maley at Miller Tabak + Co. “Valuation levels are a lousy timing tool. However, sentiment and positioning are better tools. So it’s not out of the question that today’s extreme readings on these issues could create a surprising pick up in volatility before year-end.”
Just a few days ahead of the US payrolls report, data showed job openings picked up while layoffs eased, suggesting demand for workers is stabilizing. Fed Bank of San Francisco President Mary Daly said a rate cut this month isn’t certain, but remains on the table.
“The question for investors isn’t ‘will the Fed cut again.’ but rather ‘will the next cut be in December or January’,” said Lauren Goodwin at New York Life Investments. “Our base case is that the Fed cuts 25 basis points in December, but we have much higher confidence that another cut is coming in December or January as the data evolves.”
The S&P 500 was little changed. The Nasdaq 100 added 0.1%. The Dow Jones Industrial Average slid 0.1%. Salesforce Inc. is due to report results after the close. Germany’s DAX topped 20,000.
Treasury 10-year yields advanced two basis points to 4.21%. Oil rose as the US imposed more sanctions targeting Iranian crude and OPEC+ made progress on a deal to keep output off the market.
