Markets Overview
- ASX SPI 200 futures up 0.2% to 7,678.00
- Dow Average up 1.6% to 40,212.71
- Aussie up 1.3% to 0.6306 per US$
- US 10-year yield rose 6.5bps to 4.4895%
- Australia 3-year bond yield fell 4.8 bps to 3.30%
- Australia 10-year bond yield rose 6.9 bps to 4.40%
- Gold spot up 1.9% to $3,237.61
- Brent futures up 2.3% to $64.76/bbl
Economic Events
US equity-index futures rose early Monday after President Donald Trump paused import duties on a range of consumer electronics, though he indicated a specific tariff will be announced in due course.
Nasdaq 100 contracts climbed 1.2%, with Asian stock futures also pointing to gains when cash markets reopen. The dollar rose against haven currencies Swiss franc and Japanese yen as well as the euro, unwinding some of last week’s fall.
The pause on duties on goods from smartphones to laptop computers and memory chips offers a temporary reprieve for markets ravaged by Trump’s fast-evolving trade policy. Volatility shows little signs of easing after the president signaled separate duties on consumer electronics and microchips are being planned.
“Ongoing policy confusion is likely to feed into what we view as a growing loss of confidence in US policymakers,” leading to dollar weakness and a rise in long-dated Treasury yields, Win Thin, global head of markets strategy at Brown Brothers Harriman, wrote in a note. “This has become the overarching theme in global markets and is likely to continue this week.”
Asian stocks slumped a third week last week after Trump rapidly escalated his trade war with China while announcing he would delay his so-called reciprocal tariffs that adversely impacted the region. A pause in duties on consumer electronics indicates a willingness by Trump to compromise on a deal, according to analysts. Samsung Electronics Co., and Taiwan Semiconductor Manufacturing Co. will be closely watched following Trump’s reprieve.
“We could see a good move from Chinese and Taiwan tech,” Xin-Yao Ng, a fund manager at Aberdeen Investments. Knowing a clearer direction of the strategy and why the exemptions were granted will help frame what happens next, he said.
The slight improvement to sentiment in Asia comes after the S&P 500 jumped 1.8% on Friday following a report that a Federal Reserve official said the central bank is ready to help stabilize markets, if needed.
Still, US Treasury yields climbed Friday, with benchmark 10-year bonds capping their biggest weekly jump since 2001 as investors pulled back from US assets that are normally seen as a haven from financial turmoil. Australian bond yields tracked Treasuries higher in early trading.
Japan at the weekend said it wasn’t planning to use its US Treasury holdings as a negotiating tool to counter US tariffs. Some investors speculated that global reserve managers including China could be re-evaluating their positions in US government debt given the impact of Trump’s trade policies.
Elsewhere this week, traders will be focused on how some of the world’s biggest central banks approach the rapidly shifting global outlook. Singapore’s central bank on Monday is expected to ease its monetary policy settings as it focuses on growth, while the European Central Bank is expected to reduce rates this week.
