Markets Overview

  • ASX SPI 200 futures little changed at 8,566.00
  • Dow Average down 0.2% to 42,427.74
  • Aussie up 0.5% to 0.6493 per US$
  • US 10-year yield fell 10.0bps to 4.3552%
  • Australia 3-year bond yield rose 1 bp to 3.32%
  • Australia 10-year bond yield fell 0.9 bps to 4.25%
  • Gold spot up 0.6% to $3,373.48
  • Brent futures down 1.2% to $64.84/bbl

Economic Events

  • 10:30: (AU) Australia to Sell A$1 Billion 77-Day Bills
  • 10:30: (AU) Australia to Sell A$1 Billion 126-Day Bills
  • 11:00: (AU) Australia to Sell A$150M 0.25% 2032 Inflation-Linked Bonds
  • 11:30: (AU) April International Trade Balance, est. A$6b, prior A$6.9b
  • 11:30: (AU) April Exports MoM, prior 7.6%
  • 11:30: (AU) April Imports MoM, prior -2.2%
  • 11:30: (AU) April Household Spending MoM, est. 0.2%, prior -0.3%
  • 11:30: (AU) April Household Spending YoY, est. 3.6%, prior 3.5%

 

A gauge of global equities touched a record high after small gains on Wall Street while Treasuries rallied as tepid US economic data reinforced expectations for Federal Reserve interest rate cuts this year.

Muted advances for the S&P 500 and the Nasdaq 100 on Wednesday lifted both benchmarks to within 3% of their record closing highs achieved in February. The moves were a sign the market has inched higher after the initial tumult caused by President Donald Trump’s reciprocal tariff announcement two months ago.

Equity-index futures for Japan and Australia were slightly lower while those for Hong Kong climbed. An index of US-listed Chinese shares rose 2%.

The 10-year Treasury yield fell 10 basis points to the lowest level in almost a month. US government debt rallied across the curve as data showed a contraction in US service providers and a deceleration in hiring, in turn supporting bets for Fed cuts.

Swap traders are pricing in two Fed reductions by the end of the year. The weaker yields on Wednesday added downward pressure to the greenback and left an index of the dollar 0.4% lower, compounding a weakening trend.

US economic activity has fallen slightly in recent weeks, indicating tariffs and elevated uncertainty are rippling across the economy, according to the Fed’s Beige Book. The Institute for Supply Management’s index of services dropped a touch below the 50 level that separates expansion and contraction. Private payrolls rose the least in two years. Nonfarm payroll jobs data due Friday will provide further clarity.

“Markets are likely to view this through the lens of disappointment on the real growth side,” said Florian Ielpo at Lombard Odier Investment Managers. “While this represents good news for the US economy in terms of potential rate relief, the improvement already priced into equities and credit spreads could be challenged by this series of weaker numbers.”

In Asia, data set for release Friday includes inflation for Taiwan and the Philippines, trade for Australia and Caixin Services PMIs for China. Later in the day the European Central Bank will hand down an interest rate decision.

Elsewhere, Kevin Zhao, head of global sovereign and currency at UBS Asset Management, floated the idea that Japan should stop issuing long bonds to halt a recent selloff. Japan’s sovereign debt is back in the spotlight as the government prepares for another sale of super-long-term bonds after dismal showings at recent auctions.

“It’s time for the MOF to recognize this structural shift in demand for long-dated government bonds,” Zhao said in an interview. “The MOF should announce they will stop issuing any bonds over 30 years, because there’s no demand anymore.”

In commodities, West Texas Intermediate, the US oil price, opened lower after a 0.9% Wednesday drop ended a two-day rally. The decline came as reports stated that Saudi Arabia wants OPEC+ to continue with accelerated oil supply hikes in the coming months. Gold was steady around $3,373 per ounce after rising Wednesday. Bitcoin traded around $105k, broadly where it began the week.

In Washington, US Commerce Secretary Howard Lutnick said the Trump administration has been reworking agreements forged with semiconductor makers under the 2022 Chips Act to secure what he called better terms. President Trump lamented the lack of action on a trade deal with China, underscoring the difficulty in finding common ground between the two countries.