Markets Overview
- ASX SPI 200 futures up 0.2% to 7,945.00
- Dow Average up 1.1% to 39,606.57
- Aussie down 0.1% to 0.6360 per US$
- US 10-year yield fell 1.7bps to 4.3831%
- Australia 3-year bond yield rose 6.8 bps to 3.33%
- Australia 10-year bond yield rose 0.6 bps to 4.27%
- Gold spot down 2.7% to $3,288.17
- Brent futures down 1.9% to $66.14/bbl
Economic Events
- 10:30: (AU) Australia to Sell A$1 Billion 137-Day Bills
- 10:30: (AU) Australia to Sell A$1 Billion 74-Day Bills
Global equities and long-dated Treasuries rose while havens retreated on signs US President Donald Trump is rethinking the most-aggressive elements of his combative stances on trade and the Federal Reserve.
Equity futures for Japan and Australia were primed to rise Thursday after the S&P 500 climbed 1.7% and the Nasdaq 100 rose 2.3%. A gauge of global stocks rose 1.5% Wednesday to close at the highest level in three weeks. Contracts for US equities were little changed on Thursday.
Short-dated Treasury yields climbed Wednesday while 10-year and 30-year yields fell after Trump allayed fears he would fire Fed Chair Jerome Powell. An index of dollar strength rose for a second session on Wednesday as the yen slid as US Treasury Secretary Scott Bessent said America won’t be pursuing specific exchange-rate targets in its talks with Japan. The Swiss franc, another haven currency, also fell before edging higher early Thursday in Asia.
The improved mood on Wall Street was helped along by a report stating the US would be willing to phase in lighter tariffs on Beijing over five years. Trump said separately that the US is going to have a fair deal with China and late Wednesday in Washington said China may receive a new tariff rate in the next two to three weeks.
Bessent added that the Trump administration is looking at multiple factors with regard to China beyond just tariffs. He noted that the strongest relationship between Washington and Beijing is at the top, and that there was no time frame for engagement. He said that a full rebalancing of trade might take two to three years.
“I suspect that you’re going to see more of this in the coming months as we see a ratcheting up and a pulling back up of trade tensions until we get some sort of an idea of what the future actually looks like,” said Brent Schutte at Northwestern Mutual Wealth Management.
The Trump administration is also considering reducing tariffs on auto parts ahead of a May 3 deadline, according to the Financial Times.
The latest developments improved sentiment but provided little clarity to investors battered by weeks of tariff brinkmanship between the world’s largest economies, heightening fears of global recession and the subsequent hit to corporate profits.
“Given our view that policy is driving the proverbial bus, we haven’t spent too much time in trying to forecast the outlook for earnings or the economy all that much,” said Michael Kantrowitz at Piper Sandler & Co. “As the policy backdrop becomes clearer, and is driving markets less, estimates about the economic and earnings road ahead will become important once again.”
In US corporate results, Boeing Co. beat estimates. Tesla Inc. rallied as Elon Musk vowed to pull back “significantly” from his work with the government and International Business Machines Corp. shares fell in after-hours trading on concerns that tariffs and federal cost cuts will dent its business. Southwest Airlines Co. withdrew its financial guidance amid economic uncertainty. Texas Instruments Inc. gave a bullish forecast.
Data set for release in Asia includes producer prices and machine tool orders for Japan and gross domestic product for South Korea.
Gold rebounded on Thursday after falling 2.7% in its previous session as investors sold down holdings in favor of risk assets like stocks. Oil prices and Bitcoin were little changed on Thursday in early Asian trading.
Despite the advance on Tuesday and Wednesday, the S&P 500 is still down since April 2, when Trump announced his tariff plans. Stocks have swung wildly over that stretch.
Retail investors have been aggressive buyers of US equities this year even as professional money managers ran for cover. Since April 2 alone, the group has pumped over $30 billion into American stocks and ETFs, according to JPMorgan Chase & Co.’s Emma Wu.
Meantime, the amount of money clearing houses demand to cover equity futures positions has spiked this month amid wild market swings, adding one more headache for Wall Street money managers.
CME Group Inc.’s CME Clearing raised the initial margin requirement for E-mini S&P 500 futures by nearly 30% during April, including a 12% jump in a single day, the most since the post-Covid era, according to data seen by Bloomberg.
