Markets Overview
- ASX SPI 200 futures up 0.5% to 8,888.00
- S&P 500 up 0.5% to 6,615.28
- Dow Average up 0.1% to 45,883.45
- Aussie up 0.3% to 0.6670 per US$
- US 10-year yield fell 2.9bps to 4.0375%
- Australia 3-year bond yield rose 2.6 bps to 3.46%
- Australia 10-year bond yield rose 5.9 bps to 4.27%
- Gold spot up 1.0% to $3,678.85
- Brent futures up 0.7% to $67.44/bbl
Economic Events
- 09:50: (AU) RBA’s Hunter-Fireside Chat
Australia is confident its wide-ranging security agreement with the US and UK will push ahead despite a Pentagon review, people familiar with the matter said, with Canberra recently announcing at least $9 billion in related defense investments.
Asian stocks were poised for a mainly positive open as Wall Street hit fresh highs ahead of an expected Federal Reserve interest-rate cut this week.
Equity-index futures signaled gains for Hong Kong and Sydney, boosted by bets showing a Fed cut is already priced in for Wednesday. Tokyo may slip as markets reopen from Monday’s holiday. S&P 500 contracts were steady, as a $14 trillion record-breaking run in US equities headed for an inflection point, with the expected rate cut set to dominate a week that will shape policy for half of the world’s 10 most-traded currencies.
Bets on Fed easing sent the S&P 500 above 6,600 on Monday, while the Nasdaq 100 saw its longest advance since 2023. A jump in Tesla Inc. erased its 2025 drop after Elon Musk’s $1 billion stock purchase. Also aiding sentiment was a framework deal to keep TikTok running in the US, with President Donald Trump saying he’d talk to China’s Xi Jinping on Friday.
Treasuries rose and the dollar slid. Gold rose to a new record.
Signs of labor-market weakening and no major inflation surprises have sealed the deal for what money markets project will be a quarter-point Fed cut in September. The big question, though, will be the pace of easing after that, with prices stubbornly above the central bank’s 2% target.
“Now the discussion will turn to how aggressively the Fed will act,” said Chris Larkin at E*Trade from Morgan Stanley. “The Fed may remind everyone that it may be focused on jobs now, but it hasn’t forgotten about the other half of its mandate.”
On Wednesday, US policymakers will also release their quarterly update of economic and rate forecasts — known as the dot plot — and Fed Chair Jerome Powell will hold his regular post-decision press conference. In June, Fed officials were narrowly in favor of two quarter-point cuts in 2025.
What traders will really hang on to is the tone of Powell’s press conference and the “dot plot” projections, according to Fawad Razaqzada at City Index and Forex.com.
“I’ll be watching how the market reacts to any mention of inflation being ‘well anchored’ or the labor market ‘cooling more than expected’,” he said. “That sort of language would be music to the ears of dollar bears. On the flip side, a cautious Fed that hints at a ‘wait and see’ approach might stall the rally, at least temporarily.”
Meanwhile, trade tensions between the two biggest economies could ratchet up after China ruled that Nvidia Corp. violated anti-monopoly laws with a high-profile 2020 deal. The surprise announcement emerged with officials from the nations heading into a second day of wide-ranging negotiations in Madrid over tariffs.
Also, a team of US officials was due to arrive in India on Monday night for trade deal discussions, signaling the two nations are moving closer to resolving differences.
