Markets Overview
- ASX SPI 200 futures up 0.2% to 8,116.00
- Dow Average up 0.7% to 41,393.78
- Aussie down 0.3% to 0.6702 per US$
- US 10-year yield fell 2.2bps to 3.6513%
- Australia 3-year bond yield fell 6.1 bps to 3.43%
- Australia 10-year bond yield fell 3.5 bps to 3.82%
- Gold spot up 0.8% to $2,577.70
- Brent futures down 0.5% to $71.61/bbl
Economic Events
Asian stocks are set for a cautious open Monday after a slew of worse than expected Chinese economic activity data landed over the weekend.
Futures point to a decline in Hong Kong shares, and a small gain for Australia’s benchmark. US equity futures were steady in early trading after the S&P 500 rose 0.5% on Friday. Moves in Asian markets may be exacerbated by thin trading with Japan and mainland China closed for a holiday.
Chinese factory output, consumption and investment all slowed more than forecast for August, while the jobless rate unexpectedly hit a six-month high. Home prices declined from the previous month, adding to a string of poor data that is deepening pessimism among traders wondering if authorities will initiate forceful stimulus to buttress the economy.
China’s central bank signaled late Friday it would step up its fight against deflation and prepare more policies to revive the economy, after credit data showed private confidence remained weak.
Sentiment will be hit in Asia on Monday as “the falls in housing prices are accelerating, with very little evidence of support coming from the measures that policymakers have rolled out,” said Tony Sycamore, an analyst at IG in Sydney. “The continued deleveraging in the property sector spells trouble for the rest of the Chinese economy” into the year-end.
The dollar was steady after what the Federal Bureau of Investigation called an apparent assassination attempt against former President Donald Trump. US Treasuries won’t trade in Asian hours due to the holiday in Japan.
Monday’s cautious open comes ahead of a swath of data and central bank decisions that will likely set up the direction of markets for the rest of the year and into early 2025. A Eurozone inflation reading is due as officials debate the pace of policy easing, followed by an expected rate cut by the Federal Reserve and policy decisions from Bank of England and Bank of Japan.
Treasury yields fell a second straight week with two-year notes closing at a two-year low on Friday as bets were revived on a 50 basis point rate cut by the Fed, with about 110 basis points of rate cuts priced by year-end, according to data compiled by Bloomberg. The S&P 500 jumped 4%, the best week of the year, with economically sensitive shares outperforming tech megacaps as traders rotated into companies that would benefit most from Fed policy easing.
