Markets Overview
- ASX SPI 200 futures down 0.4% to 8,843.00
- S&P 500 down 0.7% to 6,415.54
- Dow Average down 0.5% to 45,295.81
- Aussie down 0.5% to 0.6521 per US$
- US 10-year yield rose 3.3bps to 4.2614%
- Australia 3-year bond yield rose 2.9 bps to 3.45%
- Australia 10-year bond yield rose 3.9 bps to 4.36%
- Gold spot up 1.7% to $3,533.72
- Brent futures up 1.4% to $69.12/bbl
Economic Events
- 09:00: (AU) Aug. S&P Global Australia PMI Compo, prior 54.9
- 09:00: (AU) Aug. S&P Global Australia PMI Servi, prior 55.1
- 11:00: (AU) Australia to Sell A$1 Billion 4.25% 2036 Bonds
- 11:30: (AU) 2Q GDP YoY, est. 1.6%, prior 1.3%
- 11:30: (AU) 2Q GDP SA QoQ, est. 0.5%, prior 0.2%
- 18:00: (AU) RBA’s Bullock-Lecture
Australia’s economy is expected to expand 0.5% on a seasonally adjusted quarter-on-quarter basis, according to Bloomberg Economics. That’s a pickup from the unexpectedly weak 0.2% recorded in 1Q. RBA Governor Michele Bullock speaks in Perth.
Wall Street kicked off September on a sour note, with stocks joining a slide in bonds amid heavy corporate-debt sales and developed-world budget worries. The dollar rose. Gold hit a record high.
US 30-year yields approached 5%, pressuring tech shares whose valuations have widened during a surge from April lows. While the S&P 500 trimmed its losses, almost 400 of its shares fell. All megacaps slipped, with Nvidia Corp. seeing its longest slump since March. In late hours, Alphabet Inc. jumped as a federal judge ruled Google doesn’t have to sell its Chrome web browser.
Along with a slew of corporate sales, there’s been renewed concern about longer-dated global debt after years of issuance exacerbated budget deficits. In the UK, the yield on long-dated bonds hit the highest since 1998 and the pound sank as pressure mounted on Prime Minister Keir Starmer to manage the budget.
“Wake me up when September ends!” said Thomas Tzitzouris at Strategas. “We’ve been suspicious that September was going to be a volatile month, and day one is proving to be every bit as volatile as advertised.”
President Donald Trump said his administration would ask the Supreme Court for an expedited ruling in hopes of overturning a federal court decision that many of his tariffs were illegally imposed. “The stock market’s down because the stock market needs the tariffs. They want the tariffs,” he noted.
“Less tariff income means more US debt sales to cover spending deficit,” said Scott Wren at Wells Fargo Investment Institute.
As traders come back to their desks from summer vacations, they’re facing a host of concerns ranging from key economic data to US tariffs, Federal Reserve independence, monetary policy as well as global fiscal prospects.
The events arrive with the stock market seemingly at a crossroads after the S&P 500 posted its smallest monthly gain since July 2024 just ahead of what’s historically known as the weakest month for equities.
“As if we all weren’t bummed enough about the end of summer, the markets gave us all a slap in the face today to get investors back into reality,” said Bespoke Investment Group strategists.
Of course, there are fundamental reasons to support the S&P 500’s rally from April lows, with the economy staying relatively resilient as Corporate America’s profit engine keeps roaring.
But with so much uncertainty, investors have become increasingly concerned that the market is overvalued. The US benchmark trades at 22 times analysts’ average earnings forecast for the next 12 months. Since 1990, the market was only more expensive at the height of dot-com bubble and the technology euphoria coming out of the depths of the Covid pandemic in 2020.
“Outside of a September surprise, investors face ongoing threats from trade and tariff unknowns as well as potential economic releases that might show weaker-than-expected trends that could ultimately challenge elevated stock valuations,” said Anthony Saglimbene at Ameriprise. “That said, investors have been navigating those dynamics for months, and stocks have continued to grind higher.”
