Markets Overview
- ASX SPI 200 futures up 0.6% to 8,607.00
- Dow Average up 0.2% to 42,967.62
- Aussie up 0.5% to 0.6532 per US$
- US 10-year yield fell 5.9bps to 4.3612%
- Australia 3-year bond yield fell 5.1 bps to 3.35%
- Australia 10-year bond yield fell 4.5 bps to 4.24%
- Gold spot up 0.9% to $3,386.00
- Brent futures up 0.7% to $70.25/bbl
Economic Events
Asian equity-index futures were buoyed by gains in stocks and bonds on Wall Street as further signs of cooling US inflation prepared investors for Federal Reserve rate cuts.
Contracts for Japanese, Australian and Hong Kong benchmarks climbed early Friday in a sign of robust risk sentiment. The S&P 500 advanced 0.4% Thursday, placing the benchmark within striking distance of its peak and also on pace for its third weekly gain, a run not seen since December. Futures for US equities edged lower in early Asian trading.
Treasuries rallied across the curve on Thursday, bringing the 10-year yield six basis points lower to around 4.36%. The gains were supported by the second US inflation print in as many days that came in below consensus forecasts, backing the argument for Fed cuts. The dollar hit a three-year low.
The producer price index rose 0.1% from a month earlier, compared with the median forecast in a Bloomberg survey of economists that called for a 0.2% increase. A solid sale of long-term US government debt added further impetus for the rally, reducing fears that spiraling deficits are causing investors to shun the bonds.
“For the second day in a row, inflation data came in lower than expected, and this gives the Fed room to sit on their hands,” said Chris Zaccarelli at Northlight Asset Management. “As long as inflation isn’t increasing – or even better, is decreasing – the Fed can be patient and wait for more information on how the new tariffs and trade negotiations are going to impact the price stability part of their dual mandate later this year.”
An index of the dollar touched its lowest level since 2022 as US yields fell. The greenback weakened against all Group of 10 currencies.
Geopolitical worries briefly weighed on markets as ABC News reported Israel is considering military action against Iran. Oil held steady with West Texas Intermediate ending the Thursday session slightly lower at around $68 per barrel. Gold was flat early Friday after posting its second daily advance in the prior session.
In Asia, data set for release includes international reserves for Thailand and industrial production for Japan. China money supply data may be released anytime through Sunday.
The muted US inflation data offered investors a sign that tariffs have yet to result in higher prices for consumers and businesses.
As more evidence emerged of slowing inflation, President Donald Trump reiterated his complaints that the Fed has not moved quickly enough to cut rates. Trump also noted he did not plan to fire Fed Chair Jerome Powell, days after saying he would “soon” pick his nominee to lead the central bank next.
On the trade front, Trump said he may raise US auto tariffs in order to boost domestic auto manufacturing, a move that could further ratchet up tensions with trading partners. Shares of General Motors Co., Ford Motor Co. and Stellantis NV fell.
Meantime, ARK Investment Management founder Cathie Wood says corporate America is regaining its appetite for risk as expectations build around Trump’s push for deregulation and tax cuts.
Speaking on Bloomberg’s Trumponomics podcast during the Founders Forum Global conference in Oxford, Wood said major US firms are ramping up capital spending in response to a more business-friendly policy outlook. She cited Meta Platforms Inc.’s reported investment in the AI startup Scale AI as one sign of that shift.
“While stocks have rebounded and are approaching the record levels seen in February, investors may soon be wondering what could push stocks beyond that threshold,” said Rick Gardner at RGA Investments. “The next catalyst for markets may be a trade deal with China, the extension of the 2017 tax cuts and the prospect of Fed rate cuts as inflation continues to soften.”
