Markets Overview
- ASX SPI 200 futures down 0.2% to 8,476.00
- Dow Average down 0.4% to 44,837.95
- Aussie up 0.4% to 0.6454 per US$
- US 10-year yield little changed at 4.1781%
- Australia 3-year bond yield fell 2.1 bps to 3.81%
- Australia 10-year bond yield fell 3 bps to 4.23%
- Gold spot down 0.7% to $2,630.54
- Brent futures little changed at $72.29/bbl
Economic Events
- 11:00: (AU) Australia to Sell A$800 Million 3.75% 2037 Bonds
- 16:30: (AU) Nov. Foreign Reserves, prior A$99b
Stocks lost steam near all-time highs, with Wall Street traders gearing up for key jobs data that will help determine whether the Federal Reserve will cut or hold interest rates in December.
Equities dropped a day after the S&P 500 hit its 56th record this year. Short-term Treasuries underperformed, with the market standing at critical technical levels. Bitcoin pared a rally that earlier drove the digital asset past $100,000, buoyed by President-elect Donald Trump’s pick of a crypto proponent to be the next head of the US securities regulator.
In the run-up to the US payrolls report, data showed jobless claims rose to a one-month high during a week that included the Thanksgiving holiday. Economists estimate that nonfarm payrolls rose by 220,000 in November, rebounding after two hurricanes and a now-ended strike lowered October numbers. The unemployment rate is seen unchanged at 4.1%.
“We’ll get a fuller picture from tomorrow’s monthly jobs report, but for now, the story continues to be a labor market that occasionally appears to bend, but avoids breaking,” said Chris Larkin at E*Trade from Morgan Stanley.
The S&P 500 slipped 0.2%. The Nasdaq 100 slid 0.3%. The Dow Jones Industrial Average fell 0.6%. The Russell 2000 dropped 1.3%. Applied Materials Inc. sank on an analyst downgrade. Tesla Inc. rallied as Bank of America Corp. raised its price target. Meme stocks like GameStop Corp. and AMC Entertainment Holdings Inc. climbed after a cryptic X post from Keith Gill, the online persona known as Roaring Kitty.
Treasury 10-year yields were little changed at 4.18%. Swap trading shows the implied odds of a quarter-point Fed cut this month around 65%. A measure of France’s bond risk fell amid hopes lawmakers will strike a deal on next year’s budget sooner than many investors had expected.
Oil inched lower in a choppy session after OPEC+ deferred supply increases for three months, but still plans to add barrels next year to a market that’s expected to be oversupplied.
A survey conducted by 22V Research shows that 45% of investors believe Friday’s US payrolls data will be “mixed/negligible,” 32% said it will be “risk-off,” and 23% “risk-on.”
“Investors are paying the most attention to payrolls again, but attention to wages has been increasing,” said Dennis DeBusschere at 22V. “Our take is service inflation looks to be settling at a pace above what is consistent with the Fed hitting its 2% inflation target over time. That may indicate labor market inflation pressures, which makes wage inflation data more important to monitor.”
Leading indicators point to a roughly as-expected reading in the payrolls report, with headline job growth potentially coming in somewhere in the 180,000-240,000 range, albeit with a big band of uncertainty given the current global backdrop, according to Matthew Weller at Forex.com and City Index.
“With an interest-rate cut largely priced in at this point, the risks may be skewed slightly toward a bounce in the greenback if the jobs report revives the odds of a December pause,” Weller noted. “Though any market moves might be limited as the Fed’s policy decision is more around when rather than if it will pause rate cuts in the near future.”
Other News
Australia’s household spending exceeded estimates in October, suggesting the final quarter of the year began on a stronger note as consumers bought tickets to international music concerts and sporting events.
Spending advanced 0.8% from the prior month, compared with a forecast 0.3% gain, Australian Bureau of Statistics data showed on Thursday. From a year earlier, it climbed 2.8% versus an expected 2.2% increase.
“Spending rose across all nine categories in October. This was led by recreation and culture, with households snapping up tickets for several major international music concerts and sporting events in 2025,” said Robert Ewing, ABS head of business statistics. “In contrast, goods spending growth was relatively subdued.”
Household spending is an important consideration in policy decisions given consumption accounts for more than half of gross domestic product. The Reserve Bank has repeatedly highlighted the outlook for household spending as a key uncertainty after lifting the cash rate to 4.35% in late 2023 and holding it there all this year.
The RBA meets Tuesday, with economists and markets predicting no change to rates. Governor Michele Bullock said last month that inflation remains too high to consider a cut in the near term.
Her stance may come under challenge though after data on Wednesday showed the economy was only propped up last quarter by government spending and immigration. That prompted traders to bring forward bets on a first RBA rate reduction to April from May.
In seasonally adjusted, current price terms household spending on services rose 1.5% month-on-month, the ABS said.
Thursday’s data comes after retail sales figures, which cover goods spending by households, also exceeded expectations in October.
The ABS intends to cease publication of retail sales data from mid-2025, having switched to household spending, which is a more comprehensive report on consumption.
(Bloomberg)
