Markets Overview
- ASX SPI 200 futures little changed at 8,768.00
- Dow Average up 0.5% to 44,175.61
- Aussie little changed at 0.6524 per US$
- US 10-year yield rose 3.3bps to 4.2829%
- Australia 3-year bond yield rose 1.5 bps to 3.40%
- Australia 10-year bond yield rose 0.5 bps to 4.25%
- Gold spot little changed at $3,397.75
- Brent futures up 0.2% to $66.59/bbl
Economic Events
Australia’s central bank is poised to deliver its third interest-rate cut this year on Tuesday as inflationary pressures ebb, while Governor Michele Bullock is expected to stick with her cautious stance on the monetary policy outlook.
“We would still call the level of interest rates as slightly restrictive,” Diana Mousina, deputy chief economist at AMP Ltd. wrote in a note. “But we think that the RBA will still sound cautious on giving too much forward guidance and remain of the view that interest rates do not need to be aggressively cut for now.”
Asian markets were poised for a cautious open as traders await key US and Chinese data and a possible extension to Beijing’s tariff deadline.
US equity futures were little changed in early trading and the dollar was in a tight range against major peers. Contracts indicate Australian and mainland Chinese shares may open little changed, with a gain in Hong Kong. Oil edged lower. Japan’s markets are closed for a holiday.
The staid open comes ahead of a swath of data this week as traders navigate a traditionally weak period in markets. The highlight will be a key US inflation print which will provide more insight into the Federal Reserve’s rates outlook, with fears the economy is teetering on the edge of stagflation.
“Stagflation creates a dilemma for the Federal Reserve as it challenges their dual mandate of maximum employment and price stability,” Joe Unwin, head of portfolio management at Apostle Funds Management, wrote in a note. “This could lead to a scenario where interest rates remain elevated despite weaker economic growth, which would be bearish for almost all traditional asset classes.”
Asian lithium stocks will be watched Monday after battery giant Contemporary Amperex Technology Co. Ltd. suspended production at a major mine in China’s Jiangxi province for at least three months.
Chinese retail sales and industrial production data due later this week will be in focus after consumer and producer price data at the weekend indicated demand remains fragile. Traders are also waiting for confirmation that the Aug. 12 deadline for talks on US duties on Chinese imports will be extended.
“The market has fully subscribed to the high probability of the tariff truce being rolled over for another 90 days,” said Chris Weston, head of research at Pepperstone Group in Melbourne.
