Markets Overview
- ASX SPI 200 futures down 1.3% to 7,883.00
- Dow Average down 1.0% to 40,345.41
- Aussie down 1.1% to 0.6669 per US$
- US 10-year yield fell 1.8bps to 3.7080%
- Australia 3-year bond yield fell 3.9 bps to 3.50%
- Australia 10-year bond yield fell 4.6 bps to 3.88%
- Gold spot down 0.8% to $2,497.41
- Brent futures down 2.2% to $71.06/bbl
Economic Events
Asian stocks are set to drop after mixed US jobs data and a noncommittal Federal Reserve added to concerns the central bank may have waited too long to cut interest rates.
Equity futures in Australia, Japan and China point to steep losses in early trading. US equity futures edged lower after the S&P 500 fell 1.7% on Friday. The dollar was steady against major peers as traders priced in a roughly one-quarter chance of a 50-basis point Federal Reserve rate cut.
Data on Friday showed that nonfarm payrolls rose by 142,000 last month, leaving the three-month average at the lowest since mid-2020. The jobless rate edged down to 4.2%, the first decline in five months, reflecting a reversal in temporary layoffs. Hours later, Fed Governor Christopher Waller said he’s “open-minded” about the potential for a bigger rate cut.
“The mix of weaker employment data and a noncommittal Fed proved to be a toxic mix for risk,” said Chris Weston, head of research at Pepperstone Group in Melbourne. “Unless we see a more defined stance from the Fed, the combination of uncertainty toward pricing near-term Fed policy, weaker US/China/German growth and the AI-related plays lacking a bullish catalyst offers an elevated risk of further drawdown in growth-sensitive areas.”
September is proving a volatile month for markets as global stocks and commodities slumped amid fears of tepid global growth. More unease is likely as Chinese inflation and producer prices data later Monday may highlight the economic malaise that policymakers are struggling to counter.
Traders this week will be keeping a close eye on US inflation data as worries mount the Fed has waited too long to cut interest rates as recession risks grow. Treasury Secretary Janet Yellen at the weekend sought to temper fears, seeing no “red lights flashing” for the financial system and reiterated her view that the US economy has reached a soft landing even as jobs growth weakens.
The Fedspeak following the jobs print “did not indicate a sense of immediate urgency in needing to cut interest rates by 50 basis points,” said Diana Mousina, deputy chief economist at AMP Ltd. in Sydney. “So, a 25 basis point cut is more likely in September, with the risk of larger rate cuts if the data indicates the need for it.”
Other News
Westpac Banking Corp. named its business and wealth division head Anthony Miller as the Australian bank’s next chief executive officer, succeeding Peter King.
Miller, who held senior roles at Deutsche Bank AG and Goldman Sachs Group Inc., has been with the Australian firm since 2020. He will start in the role on Dec. 16, according to a statement Monday.
Miller will have a fixed renumeration of A$2.5 million ($1.7 million) as well as shorter and longer term variable compensation. One area of focus will be continuing efforts to simplify Westpac’s technology systems.
King steered the lender though the global pandemic and is known for his drive to simplify the bank to focus on core areas. He will retire after a 30-year career at Westpac, including five years as CEO.
Miller is the second new CEO of a major bank this year after National Australia Bank Ltd. picked Andrew Irvine to succeed Ross McEwan. Irvine had also helmed NAB’s business bank.
The banking regulator in July cited progress in Westpac’s risk management and governance when it reduced additional capital requirements on the lender. Those extra capital needs dated back to 2019 after regulatory violations led to a record fine to settle Australia’s biggest breach of anti-money laundering laws.
Earlier in his career, Miller spent 16 years at Goldman, including as partner. Before joining Westpac he was Deutsche Bank’s CEO of Australia and New Zealand, and co-head of APAC investment banking.
“As an internal appointment Anthony knows what needs to be done and will move at pace, ensuring a seamless transition,” Westpac Chair Steven Gregg said in the statement.
Westpac shares are up 40% this year, the best performer among Australia’s four largest banks.
(Bloomberg)
