Markets Overview

  • ASX SPI 200 futures up 0.4% to 6,943.00
  • Dow Average up 0.4% to 33,146.06
  • Aussie up 0.4% to 0.6329 per US$
  • U.S. 10-year yield fell 7.5bps to 4.7204%
  • Australia 3-year bond yield rose 4 bps to 4.13%
  • Australia 10-year bond yield rose 12 bps to 4.66%
  • Gold spot little changed at $1,823.60
  • Brent futures down 5.2% to $86.23/bbl

Economic Events

  • 10:30: (AU) Australia to Sell A$1 Billion 140-Day Bills
  • 10:30: (AU) Australia to Sell A$1 Billion 105-Day Bills
  • 11:30: (AU) Aug. Exports MoM, prior -2%
  • 11:30: (AU) Aug. Imports MoM, prior 3%
  • 11:30: (AU) Aug. International Trade Balance, est. A$8.7b, prior A$8.04b

The selloff in stocks and bonds got a reprieve Wednesday as traders parsed US data and increased bets that the Federal Reserve can refrain from further interest rate increases.

Equity gauges touched session highs in the final minutes of trading with the Nasdaq 100 rising 1.4% after a final leg higher in the tech sector.

Ten-year Treasury yields ended the day lower after the rate on the benchmark touched a high of 4.88% during Asian trading hours. Traders trimmed wagers on a rate increase for this year after Wednesday’s data suggested demand in several industries is slowing, countering a Tuesday readout.

US companies added the fewest number of jobs since the start of 2021 in September, according to a survey from the ADP Research Institute in collaboration with Stanford Digital Economy Lab. A separate report from the Institute for Supply Management showed the services sector also pulled back modestly last month to the lowest level this year.

The latest leg of the selloff had been fueled by Tuesday’s better-than-expected US job data, as well as a slew of hawkish comments from Federal Reserve officials. As conviction grew that US interest rates could rise further from current 22-year highs, 30-year yields touched 5% for the first time since 2007.

Wall Street had been saying longer term bonds at 5% yields were likely in the near-term. One-time bond king Bill Gross weighed in saying that the US 10-year at 5% would provide “decent” but not “great value” as inflation remains high.

Volatility could make another appearance when Friday’s payrolls numbers hit. Before that traders can parse initial jobless claims data for signs that the economy is cooling and the Fed can pull back from its higher-for-longer messaging.

In commodities, crude plunged, with West Texas Intermediate dropping below $85 a barrel, while gold slid.

Other News

Australian design software company Canva Inc. unveiled a suite of artificial intelligence-powered tools to take on competitors including Adobe Inc.

One of its key distinctions is the ability to instantly convert designs from one format to another with a click, the company said. Users can, for instance, turn a presentation into a summary or create a blog post from notes jotted down during brainstorming, translating into various languages in the process. Canva’s tools can also turn text into photos and create videos from an image or text using Gen-2, a video-generation model by Runway AI Inc.

“We have more than 10 new AI products that fill significant gaps in the workflows of our community around the world,” Chief Executive Officer Melanie Perkins said in an interview. Canva’s users have grown 20% since March to 150 million, with 16 million subscribers.

The new suite, dubbed Magic Studio, marks the latest in a series of product launches in the past year, including enterprise-focused tools in September 2022 and AI software in March.

Canva, which was founded about a decade ago, competes with Adobe, the longtime leader in creative software for graphic arts professionals. Founded four decades ago, Adobe has added generative AI features throughout its products. Its market capitalization has swelled 50% this year to $231 billion.

Investors have long viewed Canva as a candidate to go public, though the company hasn’t discussed plans for doing so. Valued at about $26 billion earlier this year, Canva has focused on making easy-to-use products targeted at people without professional design skills to fuel growth.

The startup surpassed $1.7 billion in annualized revenue and has added 65 million users in the past year, helped by new AI features.

(Bloomberg)