Markets Overview
- ASX SPI 200 futures down 0.6% to 8,456.00
- Dow Average down 0.4% to 44,546.08
- Aussie up 0.6% to 0.6355 per US$
- US 10-year yield fell 5.3bps to 4.4762%
- Australia 3-year bond yield fell 2.8 bps to 3.84%
- Australia 10-year bond yield fell 5.4 bps to 4.42%
- Gold spot down 1.6% to $2,882.53
- Brent futures down 0.4% to $74.74/bbl
Economic Events
Asian stocks are set to come under pressure early Monday as traders navigate increasing tensions between the US and European Union and looming central bank monetary policy decisions.
Equity futures in Australia and Hong Kong point to an early loss while those in Japan were steady. The S&P 500 closed little changed on Friday and Treasuries climbed as traders resurfaced expectations the Federal Reserve’s next cut will be in September after US retail sales slumped by the most in nearly two years. Australian bonds edged higher in early trading Monday and the dollar was steady.
The tepid start to the week comes as investors monitor a ratcheting in tensions between the US and Europe after President Donald Trump’s tariff plans that have sparked threats of retaliation. Vice President JD Vance attacked longstanding European allies at a security conference at the weekend while plans to negotiate an end to the war in Ukraine have left the bloc on the sidelines.
“The lack of visibility given what still seems to be an unpredictable US administration means that short-term market participants do not have much conviction,” said Marc Chandler, chief market strategist at Bannockburn Global Forex. “The bilateral talks between the US and Russia over Ukraine is a bit like the Suez Crisis (1956) where US interests diverged starkly from the UK and France. Now may be the most strained relationship between the US and Europe since then.”
Investor focus is likely to remain on macroeconomic data in the short term with a raft of policy decisions from Wellington to Jakarta due this week. The Reserve Bank of Australia is expected to begin its long awaited interest rate cut cycle on Tuesday, while New Zealand’s central bank is likely to continue its rapid easing to support a sluggish economy on Wednesday.
“We expect the RBA to finally start its easing cycle, as inflation has been easing meaningfully,” Societe Generale economists including Wei Yao wrote in a note to clients.
Investors will also be looking to China stocks after a gauge of US-listed mainland shares climbed 2.3% on Friday amid a euphoria over artificial intelligence companies.
“The market is showing a genuine shift in animal spirits,” said Kyle Rodda, a senior analyst at Capital.com in Melbourne. “On top of some green shoots in the economic data, the DeepSeek breakthrough that came to wider market attention a few weeks ago seems to have stoked risk appetite in China.”
Elsewhere this week, inflation readings in Japan, UK and Canada are due as well as jobs data in Australia. China’s banks are set to keep their loan prime rates steady after credit expansion picked up far more than expected in January from a year ago, though overall credit growth remains at a historically weak level.
