Markets Overview
- ASX SPI 200 futures down 0.7% to 8,642.00
- Dow Average down 0.7% to 44,130.98
- Aussie down 0.1% to 0.6425 per US$
- US 10-year yield little changed at 4.3720%
- Australia 3-year bond yield rose 2.7 bps to 3.42%
- Australia 10-year bond yield rose 0.5 bps to 4.26%
- Gold spot up 0.5% to $3,290.42
- Brent futures down 1.0% to $72.53/bbl
Economic Events
- 09:00: (AU) July S&P Global Australia PMI Mfg, prior 51.6
- 11:00: (AU) Australia to Sell A$1.2 Billion 2.75% 2035 Bonds
- 11:30: (AU) 2Q PPI YoY, prior 3.7%
- 11:30: (AU) 2Q PPI QoQ, prior 0.9%
US and Asian equity-index futures fell as tariff headlines filtered through, while solid earnings from megacap tech firms failed to lift broader market sentiment.
Contracts for the S&P 500 and the Nasdaq 100 retreated 0.2%, as did futures for major markets in Asia Pacific. President Donald Trump kept a minimum ‘reciprocal’ tariff rate of 10% while increasing the levy on Canada to 35% from 25%. The US started publishing tariff rates for several countries and initial market reaction was muted.
US stocks fell Thursday, erasing an initial advance on tech earnings that sent Microsoft Corp. above $4 trillion in market value.
Apple Inc. shares rose in after-market trading following a sales beat, while those for Amazon.com Inc. fell as its outlook underwhelmed. Treasuries traded in a narrow range Thursday, gold climbed and the dollar strengthened for a sixth session.
The moves were a sign that concern over tariffs and growth has begun to outweigh the optimism linked to artificial intelligence that has supported mega-cap tech stocks. While AI continued to underpin long-term bullishness, investors were now bracing for potential trade disruptions as the US and key partners weighed new levies.
“While we expect equities to advance over the next 12 months, investors should be mindful of potential market swings in the coming weeks,” said Mark Haefele at UBS Global Wealth Management. “We think capital preservation or phasing-in strategies can be effective in navigating near-term volatility.”
Meanwhile, Trump sent letters to 17 of the largest pharmaceutical companies in a bid to lower prices, weakening their shares Thursday. Trump is also asking bank chief executive officers for their pitches on monetizing mortgage giants Fannie Mae and Freddie Mac, including a major public offering of stock, according to people familiar with the matter.
The yield on 10-year Treasuries was little changed at 4.37% Thursday. A stronger greenback saw the yen weaken past 150 per dollar. The weaker yen followed comments from Bank of Japan Governor Kazuo Ueda that were seen as less hawkish than expected.
The market’s attention will soon turn to Friday’s jobs report for July, which is forecast to show companies are becoming more deliberate in their hiring. Employment likely moderated after a June increase, while the unemployment rate is seen ticking up to 4.2%.
In the run-up, the Fed’s preferred measure of underlying inflation accelerated in June to one of the fastest paces this year while consumer spending barely rose, underscoring the dueling forces dividing policymakers over the path of rates.
The core personal consumption expenditures price index rose 0.3% from May. It advanced 2.8% on an annual basis, a pickup from June 2024 that underscores limited progress on taming inflation in the past year. The data also showed inflation-adjusted consumer spending edged up last month.
“Inflation remains sticky and justifies the Fed’s decision to keep rates unchanged at Wednesday’s meeting,” said Clark Bellin at Bellwether Wealth. “The stock market doesn’t need rate cuts in order to move higher and has already posted strong gains so far this year without any rate cuts.”
