Markets Overview
- ASX SPI 200 futures up 0.6% to 8,869.00
- S&P 500 up 0.8% to 6,502.08
- Dow Average up 0.8% to 45,621.29
- Aussie down 0.4% to 0.6518 per US$
- US 10-year yield fell 5.6bps to 4.1607%
- Australia 3-year bond yield fell 5 bps to 3.48%
- Australia 10-year bond yield fell 6.4 bps to 4.35%
- Gold spot down 0.4% to $3,545.70
- Brent futures down 1.2% to $66.82/bbl
Economic Events
- 11:00: (AU) Australia to Sell A$900 Million 1.5% 2031 Bonds
- 16:30: (AU) Aug. Foreign Reserves, prior A$102.8b
Australian Prime Minister Anthony Albanese says he had another “warm and constructive” conversation with US President Donald Trump on Thursday night. They discussed trade and areas for growth including critical minerals.
Shares in Asia were poised for early gains Friday after stocks and bonds rallied on Wall Street as further signs of a cooling labor market reinforced bets the Federal Reserve will cut rates this month.
Equity-index futures for Japan, Australia and Hong Kong all rose. The S&P 500 added 0.8% to a new peak while the Nasdaq 100 rose 0.9% on Thursday. A measure of global stocks climbed for a second day. US futures edged higher in early Asian trading, helped along by post-market gains for Broadcom Inc. as its chief executive said its AI outlook would improve “significantly.”
Treasuries rallied across the curve. The policy-sensitive US two-year yield fell three basis points to the lowest in around a year Thursday. Money markets almost fully priced in a Fed reduction this month and see at least two by year-end.
The action reflected the latest readings on hiring and unemployment claims before Friday’s jobs data, which is expected to extend the weakest stretch of US job growth since the pandemic. Slowing demand, rising costs and President Donald Trump’s unpredictable trade policies have cooled hiring, adding pressure on the Fed to shore up the labor market.
“Many investors are clearly hoping for rate cuts, but it is important to remember to be careful what we wish for,” said Steve Sosnick at Interactive Brokers. “Data that show a gently decelerating but not dire labor market would suit that goal. Plunging data might bias the Fed to further cuts, but could also raise concerns that the central bank is too far behind the curve.”
Elsewhere, Trump signed an executive order Thursday implementing his trade agreement with Japan, under which the US will impose a maximum 15% tariff on most of its products.
China’s stock markets will once again be in focus after shares fell more than 2% Thursday. The country’s financial regulators are considering a number of cooling measures for the stock market as they grow concerned about the speed of recent gains.
Meanwhile, traders are now positioning themselves for the key jobs reading. Consensus forecasts peg nonfarm payrolls having grown 75,000 in August, which would mark a fourth straight month of job growth below 100,000. The unemployment rate is seen rising to 4.3% — the highest level since 2021.
In the run-up to the data, figures showed US jobless claims rose to the highest since June. Private-sector payrolls increased by 54,000, according to ADP Research data, missing estimates. Hiring plans fell to the weakest level for any August on record, according to Challenger, Gray & Christmas.
“The Federal Reserve’s free pass on the labor market has ended,” said Jamie Cox at Harris Financial Group. “You can expect the Fed to tilt its balance of risks to cut rates in September.”
