Markets Overview

  • ASX SPI 200 futures little changed at 8,661.00
  • Dow Average down 0.5% to 44,632.99
  • Aussie down 0.2% to 0.6510 per US$
  • US 10-year yield fell 8.9bps to 4.3204%
  • Australia 3-year bond yield fell 2.5 bps to 3.46%
  • Australia 10-year bond yield fell 1.1 bps to 4.33%
  • Gold spot up 0.4% to $3,326.47
  • Brent futures up 3.8% to $72.68/bbl

Economic Events

  • 11:30: (AU) 2Q CPI YoY, est. 2.2%, prior 2.4%
  • 11:30: (AU) 2Q CPI QoQ, est. 0.8%, prior 0.9%
  • 11:30: (AU) June CPI YoY, est. 2.1%, prior 2.1%
  • 11:30: (AU) 2Q CPI Trimmed Mean QoQ, est. 0.7%, prior 0.7%
  • 11:30: (AU) 2Q CPI Weighted Median QoQ, est. 0.6%, prior 0.7%
  • 11:30: (AU) 2Q CPI Weighted Median YoY, est. 2.7%, prior 3.0%
  • 11:30: (AU) 2Q CPI Trimmed Mean YoY, est. 2.7%, prior 2.9%
  • 11:30: (AU) June CPI Trimmed Mean YoY, prior 2.4%

Asian equities are set for a lackluster start ahead of the Federal Reserve’s policy decision, with investors showing little enthusiasm for progress in US-China trade talks.

Futures for Tokyo and Hong Kong equities pointed lower, while Sydney contracts were flat after the S&P 500 snapped a six-day rally, slipping 0.3%. Treasuries climbed, led by longer-dated notes, following a solid $44 billion sale. Oil held gains early Wednesday after President Donald Trump’s reiteration that further levies on Russia remained on the table without a Ukraine truce.

Treasury Secretary Scott Bessent said the US and China will continue talks over maintaining a tariff truce before it expires in two weeks and that Trump will make the final call on any extension. Adding an extra 90 days is one option, Bessent said.

Markets, however, appear increasingly numb to trade developments. Much like the tepid reaction to the US-EU tariff deal, the latest signs of progress with Beijing failed to lift sentiment in a meaningful way.

“While there is disappointment that nothing material was agreed, the mood seems to be constructive and optimistic about future potential deals,” said Kelvin Lam, senior China economist at Pantheon Macroeconomics in London. “In the medium term, the extension is basically relaying the uncertainty of trade policies, and it will weigh on the Chinese economy in the second half.”

There are other market-moving factors on the horizon. Those include Wednesday’s Fed decision — where policy makers are expected to keep rates on hold — and key data including Friday’s jobs report. Four tech giants will also report earnings over a two-day stretch.

“Investors are now more focused on hard data to validate the economic and policy outlook, rather than over-interpreting trade agreements,” said Dilin Wu at Pepperstone Group Ltd.

On the economic front, US consumer confidence increased as concerns eased about the outlook for the broader economy and the labor market. While job openings fell, they hovered at a level that indicates generally stable demand for workers.

“Overall, it was a mixed round of data that has done little to materially challenge the price action or macro narrative,” said Ian Lyngen at BMO Capital Markets.

In a rare occurrence, policymakers will convene in the same week that the government issues reports on gross domestic product, employment and the Fed’s preferred price metrics.

Forecasters anticipate the heavy dose of data will show economic activity rebounded in the second quarter, largely due to a sharp narrowing of the trade deficit, while job growth moderated in July. The third marquee report may show underlying inflation picked up slightly in June from a month earlier.

With the Fed’s benchmark rate holding at a target range of 4.25% to 4.5% since December, the business world is looking for any clue that officials are moving toward a rate reduction in the fall. Fed Chair Jerome Powell could face dissent from one or more colleagues arguing it’s time for the central bank to provide more support to a slowing labor market.

“We believe the Fed wants to maintain flexibility on when to deploy further rate cuts. In our view, the Fed will remain on hold until ‘hard data’ begins to confirm the slowdown story,” said Luis Alvarado at Wells Fargo Investment Institute. “The Fed will have the opportunity to cut rates later in the year if the economy slows and as long as inflation allows.”