Markets Overview
- ASX SPI 200 futures little changed at 8,583.00
- Dow Average up 0.8% to 44,828.53
- Aussie down 0.2% to 0.6560 per US$
- US 10-year yield little changed at 4.3457%
- Australia 3-year bond yield rose 1.6 bps to 3.33%
- Australia 10-year bond yield rose 1 bp to 4.19%
- Gold spot up 0.3% to $3,337.15
- Brent futures down 0.7% to $68.30/bbl
Economic Events
- 11:30: (AU) June ANZ-Indeed Job Advertisements , prior -1.2%
Asian equities were set for a cautious start as investors awaited further details on US import duties ahead of a July 9 deadline. Oil fell after OPEC lifted output.
The dollar was steady against major peers in early trading while US equity futures slipped. Contracts for Asian equities indicated Australian, Japanese and Hong Kong markets may open steady when trading resumes Monday.
The cautious start comes as the trade war continued to cloud the outlook for inflation and corporate profitability. US Commerce Secretary Howard Lutnick said country-by-country tariffs will take effect Aug. 1, with major US trading partners hurrying over the weekend to secure trade deals or lobby for extra time.
“This is a reflection of some uncertainty over the July 9 reciprocal tariff expiry deadline,” said Tony Sycamore, an analyst at IG in Sydney. A tariff rate of 10%-15% on most if not all countries would be welcome by traders, whereas a rate greater than 20% “would rattle markets to varying degrees depending on the extent of the increase,” he said.
Crude fell almost 2% as OPEC+ said it will increase oil production even more rapidly than expected next month with eight key alliance members agreeing to raise supply by 548,000 barrels a day.
Negotiations still remained ongoing ahead of the July 9 deadline, with European leaders pushing for a deal that would allow tariff relief on carmakers for increasing US investments. Treasury Secretary Scott Bessent indicated some countries may be offered a three-week extension to negotiate.
“We judge there is a risk that President Trump reinstates higher ‘reciprocal’ tariffs on major economies such as Japan and Europe,” Commonwealth Bank of Australia strategists including Joseph Capurso wrote in a note to clients. “Higher US tariffs on the major economics would likely weigh on the US dollar against the major currencies like the Euro, yen and pound in our view, similar to the reaction ‘Liberation day’ in early April.”
China, meanwhile, said it will impose some reciprocal curbs on medical-device procurement for companies based in the European Union, adding tensions between the two major trading partners just as Beijing seeks to shore up ties with the US.
The fall in crude prices came as the alliance, led by Saudi Arabia, agreed to lift production as they sought to capitalize on strong summer demand in its move to reclaim market share.
The increase, faster than traders and analysts foresaw, may contribute to a crude surplus later this year with Wall Street firms such as JPMorgan Chase & Co. and Goldman Sachs Group Inc. anticipating that prices sink near $60 a barrel in the fourth quarter.
“For now, the oil market remains tight, suggesting it can absorb additional barrels,” said Giovanni Staunovo, an analyst at UBS AG in Zurich. “But there are rising risks like ongoing trade tensions, implying that the market could look less tight over the coming 6-12 months, which would pose downside risks to prices.”
