Markets Overview
- ASX SPI 200 futures up 0.6% to 8,117.00
- Dow Average up 0.6% to 41,096.77
- Aussie up 0.7% to 0.6722 per US$
- US 10-year yield rose 2.1bps to 3.6740%
- Australia 3-year bond yield rose 1.7 bps to 3.49%
- Australia 10-year bond yield rose 0.3 bps to 3.85%
- Gold spot up 1.9% to $2,558.73
- Brent futures up 2.2% to $72.17/bbl
Economic Events
Asian equities were set to advance Friday after a fourth day of gains on Wall Street as the latest batch of economic data did little to dissuade investors about the trajectory of anticipated Federal Reserve rate cuts.
Equity futures in Japan, Australia and Hong Kong climbed, with each rising by less than 1% in a sign of muted risk appetite. A pause in the yen’s strengthening trend boosted Japanese exporters on Thursday, with the currency trading just below 142 per dollar in early trading.
Treasury 10-year yields advanced two basis points to 3.67% Friday and an index of the dollar fell. German bunds snapped a seven-day winning streak after European Central Bank President Christine Lagarde said rates will be sufficiently restrictive in the wake of an expected quarter-point interest rate cut to 3.5%. Oil climbed. Gold hit an all-time high.
The US producer price index picked up slightly in August after the previous month’s numbers were revised lower, and categories that feed into the Fed’s preferred inflation gauge were muted. Separate data showed jobless claims ticked up.
The data did little to alter expectations the Fed will trim rates when its monetary policy committee meets next week, but for some kept alive the idea the first cut may be 50 basis points, twice the regular cadence.
“We think PPI sustains a lingering possibility of a starter 50, which would take less risk with the soft landing,” said Krishna Guha at Evercore.
Thursday’s wholesale inflation data followed the more closely watched consumer price index, which showed underlying inflation accelerated in August. Yet policymakers have made it clear that they’re currently highly focused on softness in the labor market, which is more likely to drive policy discussions in the months ahead.
“With PPI basically repeating yesterday’s CPI reading and jobless claims in line with expectations, the decks have been cleared for the Fed to kick off a rate-cutting cycle,” said Chris Larkin at E*Trade from Morgan Stanley. “The markets are anticipating an initial 25 basis-point cut, but the discussion will soon turn to how far and fast the Fed is likely to trim rates over time.
Other News
ANZ Group Holdings Ltd. is considering reviving a sale of its stake in PT Bank Pan Indonesia, according to people with knowledge of the matter, as the Australian lender seeks to reduce positions in some long-held Asian assets.
ANZ has been working with a financial adviser to help field preliminary interest in its 38.8% holding in the Jakarta-listed lender known as Panin Bank, the people said, asking not to be identified because the information is private. Potential suitors have included Japanese and Southeast Asian lenders, including from Malaysia, the people said.
Considerations are ongoing and may not lead to a sale, the people said, noting that valuation is a hurdle to a potential deal. A spokesperson for ANZ declined to comment.
Panin Bank’s shares jumped as much as 7.8% on Thursday morning following the Bloomberg News report. Panin Bank has now risen about 18% this year, for a market value of 34.3 trillion rupiah ($2.2 billion).
ANZ Chief Executive Officer Shayne Elliott earlier this year said he aims to grow his firm’s presence in India, China and Vietnam, while at the same time is seeking to exit positions in Panin Bank and Bank of Tianjin Co. Separately, Elliott is facing pressure over trader misconduct and regulatory investigations into ANZ’s markets division.
ANZ bought into Panin Bank in 1999, raising its stake to more than 38% a decade later. The Southeast Asian bank is 46% controlled by Indonesia’s Gunawan family, whose reluctance to give a board seat to incoming investors hampered ANZ’s earlier negotiations with suitors, Bloomberg News reported in 2015.
ANZ sold its 21.7% stake in Malaysian lender AMMB Holdings Bhd. earlier this year. Attempts to sell its Panin Bank holding stretch back more than a decade — in 2013, talks with Mizuho Financial Group Inc. fell apart after new regulations made it more expensive to have minority investments overseas, Bloomberg News reported at the time.
Other Japanese banks including Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. have previously considered bidding for Panin Bank, but those efforts stalled on valuation concerns.
