Markets Overview
- ASX SPI 200 futures down 0.3% to 8,296.00
- Dow Average down 0.7% to 43,444.99
- Aussie up 0.2% to 0.6466 per US$
- Kiwi up 0.2% to 0.5859 per US$
- US 10-year yield little changed at 4.4394%
- Australia 3-year bond yield fell 4.1 bps to 4.17%
- Australia 10-year bond yield fell 6 bps to 4.64%
- Gold spot little changed at $2,563.25
- Brent futures down 2.1% to $71.04/bbl
Economic Events
- 11:00: (AU) Australia to Sell A$300 Million 2.75% 2041 Bonds
- 17:30: (AU) RBA’s Kent-Speech
Most Asian stocks are set to fall early Monday as traders rein in expectations of Federal Reserve easing and come to terms with the cost of President-elect Donald Trump’s proposed fiscal and trade policies.
Equity futures in Australia, Japan and mainland China point to losses, while contracts in Hong Kong edged higher. US stocks slid 1.3% on Friday to erase more than half of their gain following the US election.
A soft start risks extending last week’s global selloff as investors price the prospect of Trump’s tariffs and tax cuts potentially reigniting inflation in an already robust US economy. Views are emerging that the Fed may pause its easing cycle in 2025, with the odds of a rate cut next month now seen as less than a coin toss.
“Another Fed cut is still likely in December but it’s now a close call,” Shane Oliver, chief economist at AMP Ltd. in Sydney, wrote in a note to clients. “A slower pace of easing is likely next year, particularly given that Trump’s policies regarding tariffs and more tax cuts provide some upside threats to inflation on a one-to-three year view.”
The dollar was steady against major peers in early trading after climbing 1.4% last week, a seventh straight weekly gain as Treasury yields surged on slashed expectations for Fed policy. The moves, coupled with concerns over Chinese growth, have ravaged everything from the Australian dollar to emerging market bonds. Asian stocks slumped 3.9% last week, their worst sell-off in about six months.
In Asia on Monday, traders will be watching a speech and media briefing by Bank of Japan Governor Kazuo Ueda for indications of the central bank’s next policy move after officials raised concerns over the rapid weakening of the yen. Markets are pricing about 14 basis points of rate hikes in December, according to swaps data compiled by Bloomberg, ahead of inflation data this week.
“Ueda’s press conference should be the biggest focus of this week in gauging the timing of the BOJ’s next rate hike,” Barclays strategists led by Themistoklis Fiotakis wrote in a note to clients. “USD/JPY could remain under upward pressure in the short term due to the Trump and yen carry trades, but will likely rise more slowly as it approaches 160 on FX intervention concerns and positioning for faster rate hikes.”
Elsewhere this week, China’s banks are expected to keep their loan prime rates unchanged after a cut in October. Bank Indonesia will deliver a policy decision as the rupiah neared 16,000 per dollar on Friday, a key psychological level for a central bank focused on currency stability.
UK and eurozone inflation readings are due which will help gauge the outlook for Bank of England and European Central Bank policy with a swath of officials from the respective central banks also due to speak. Nvidia’s results may test the sustainability of AI-led stock gains.
While expectations for a blowout number seem low, “options traders see a greater risk of the share price kicking higher on the earnings release,” said Chris Weston, head of research at Pepperstone Group in Melbourne. “Guidance from the hyperscaler businesses suggests demand for GPUs is incredibly strong, so one can understand why options traders are positioned for near-term upside.”
