Markets Overview
- ASX SPI 200 futures down 0.8% to 8,203.00
- Dow Average down 1.7% to 43,428.02
- Aussie down 0.5% to 0.6368 per US$
- US 10-year yield fell 7.4bps to 4.4313%
- Australia 3-year bond yield fell 2.1 bps to 3.93%
- Australia 10-year bond yield fell 1.4 bps to 4.51%
- Gold spot little changed at $2,936.05
- Brent futures down 2.7% to $74.43/bbl
Economic Events
- 11:00: (AU) Australia to Sell A$300 Million 4.25% 2034 Bonds
Stocks in Asia were primed to fall after Wall Street notched up its worst session of the year on lacklustre US economic data. The euro strengthened following an election in Germany.
Equity index futures for Australia and Hong Kong fell, indicating a gauge of the region’s shares will decline from the four-month closing high struck Friday. Japanese markets are closed Monday for a holiday.
The drop in equity futures echoed the downbeat mood in New York trading on Friday. The S&P 500 fell 1.7% while the Nasdaq 100 dropped 2.1% as traders balanced signs of a cooling economy against the prospect the Federal Reserve is in no rush to trim interest rates.
US data released Friday show US consumers’ long-term inflation expectations rising to the highest level in almost three decades. Fed’s Chicago President Austan Goolsbee downplayed the report, telling News Nation on Sunday that the figure “wasn’t a great number, but it’s only one month of data. You need at least two or three months for that to count.”
Elsewhere US business activity expanded at the slowest pace since September 2023 while existing home sales fell for the first time since September.
Australian and New Zealand yields fell early Monday after a rally in US government debt on Friday. The US 10-year yield dropped 7 basis points on the day to 4.43%, a level not seen in more than two weeks. Treasuries trading in Asia is closed due to the holiday in Japan.
The dollar was mixed against major currencies in early Monday trading in Sydney. The euro rose 0.2% against the dollar after Germany’s conservative opposition leader Friedrich Merz said he’ll move quickly to form a new government following Sunday’s federal election victory.
In Asia, data set for release includes inflation for Singapore and retail sales for South Korea. China’s one-year medium-term lending facility may be released any time through February 25.
Chinese Vice Premier He Lifeng expressed “serious concern” over President Donald Trump’s 10% tariff hike on Chinese goods in a call with Treasury Secretary Scott Bessent, China Central Television reported Friday. For his part, Bessent also signaled concerns on a host of issues with China, including “economic imbalances,” the US Treasury said.
The Trump administration told Mexican officials that they should put their own duties on Chinese imports as part of their efforts to avoid tariffs threatened by President Donald Trump, according to people familiar with the matter.
Separately, Trump is directing the Committee on Foreign Investment in the United States to restrict Chinese spending on technology, energy and other strategic US sectors, his administration’s latest salvo against the world’s second-largest economy.
In corporate news, Berkshire Hathaway Inc. is looking to increase ownership in Japan’s five largest trading houses “over time,” Warren Buffett said in an annual letter to shareholders. Saipem SpA and Subsea7 SA agreed in principle to create an oil services company with a combined backlog of €43 billion and expected revenue of about €20 billion.
