Markets Overview
- ASX SPI 200 futures up 0.5% to 8,571.00
- Dow Average up 0.5% to 44,458.30
- Aussie little changed at 0.6535 per US$
- US 10-year yield fell 6.7bps to 4.3320%
- Australia 3-year bond yield rose 5.1 bps to 3.47%
- Australia 10-year bond yield rose 7.7 bps to 4.34%
- Gold spot up 0.4% to $3,313.69
- Brent futures little changed at $70.15/bbl
Economic Events
- 10:30: (AU) Australia to Sell A$1 Billion 119-Day Bills
- 10:30: (AU) Australia to Sell A$1 Billion 77-Day Bills
- 11:00: (AU) Australia to Sell A$150 Million 2% 2035 Inflation-Linked Bonds
Asian equities were set to join a rally in US shares and Bitcoin in a sign investors are looking through the latest tariff headlines to focus on corporate profits and the economy.
Equity-index futures for Japan and Australia climbed early Thursday while those for Hong Kong were flat. The S&P 500 rose 0.6% and the Nasdaq 100 climbed 0.7%, helped along by tech gains that pushed Nvidia Corp to become the first company in history to touch $4 trillion in market value. Contracts for US stocks edged higher in early Asian trading.
Investors have been piling back into the AI trade after a choppy first half of 2025. The equity rally indicated traders were brushing off fears President Donald Trump’s latest push on reciprocal tariffs would lead to a meaningful slowdown for the global economy or company earnings.
Trump unveiled a new round of tariff demand letters on Wednesday that included a 50% tariff on imports from Brazil. This marked one of the highest levies announced so far which are set to hit in August. He cited the treatment of former President Jair Bolsonaro in his letter to the nation, calling on authorities to drop charges against him over an alleged coup attempt. Brazil’s real tumbled.
“Most investors believe that the economy is strong, corporate profits will be resilient and are eager to buy stocks,” said Chris Zaccarelli at Northlight Asset Management. “We believe more caution is warranted because we haven’t yet seen the impact of tariffs on corporate profits and consumer spending,” he said.
Treasuries climbed Wednesday after a solid $39 billion sale, snapping a recent sell-off. US 10-year yields fell seven basis points to 4.33%. A sale of the bonds drew a yield of 4.362%, slightly lower than indicated by pre-auction trading just before the bidding deadline, indicating demand exceeded expectations. A $22 billion offering of 30-year debt is set for Thursday.
The emerging divide among Federal Reserve officials over the outlook for interest rates is being driven largely by differing expectations for how tariffs might affect inflation, a record of policymakers’ most recent meeting showed.
“While a few participants noted that tariffs would lead to a one-time increase in prices and would not affect longer-term inflation expectations, most participants noted the risk that tariffs could have more persistent effects on inflation,” the minutes of the Federal Open Market Committee’s June 17-18 meeting said.
A gauge of the dollar and oil prices were flat Wednesday while gold inched 0.4% higher.
In Asia, data set for release Thursday includes a rate decision in South Korea, while money supply for China may be released any time through July 15. Markets are closed in Thailand.
Elsewhere, an auction of 20-year Japanese government bonds Thursday will beam the searchlight back on rising yields as a looming election heightens concerns about fiscal expansion. Japanese telecom giant NTT Inc. received more than $100 billion of investor orders as it sold bonds to help refinance bridge loans used to increase its stake in the data-center unit being taken private.
Wednesday’s equity rally pushed the S&P 500 to within a few points of its record high. The CNN Fear & Greed Index is now signaling “extreme greed,” an indication of the market’s bullish momentum. A gauge of megacaps added 1.1%, with Nvidia extending this year’s surge to more than 20%. In another sign of risk appetite, Bitcoin topped $112,000 for the first time.
Fast-money investors are edging their way back into US stocks after sitting out a furious rally, bolstering the case for equities to extend their advance further into uncharted territory.
“We believe the setup for equity markets looks bullish, even in light of renewed trade-war jitters,” said Craig Johnson at Piper Sandler. “While equities may come under some near-term pressure, investors are increasingly becoming numb to the tariff headlines and instead focusing on the trendlines.”