Markets Overview
- ASX SPI 200 futures down 0.9% to 8,304.00
- Dow Average down 0.8% to 42,908.62
- Aussie down 0.7% to 0.6658 per US$
- US 10-year yield rose 10.5bps to 4.1877%
- Australia 3-year bond yield fell 3.1 bps to 3.82%
- Australia 10-year bond yield fell 3.5 bps to 4.27%
- Gold spot little changed at $2,719.65
- Brent futures up 1.4% to $74.09/bbl
Economic Events
Most Asian shares were set for declines as Wall Street stocks took a breather after notching their longest weekly rally this year.
Futures for benchmarks in Hong Kong, Shanghai and Sydney pointed to losses, though Tokyo shares were heading for small gains. That’s after equities in the US dropped from nearly overbought levels, following a relentless advance to all-time highs. The S&P 500 fell 0.2%, with all of its major groups but technology pushing lower. The Dow Jones Industrial Average slid 0.8%.
In another sign of how greed has trumped fear, the S&P 500 hasn’t suffered back-to-back losses in about 30 sessions. While a month with no consecutive down days may not sound like much, the current streak ranks among the very best since 1928, according to data compiled by SentimenTrader.
“The index remains overbought across multiple time frames and is still vulnerable to profit-taking over the short run,” said Dan Wantrobski, director of research at Janney Montgomery Scott.
US 10-year yields jumped 11 basis points to 4.20%. They will test the 5% threshold in the next six months amid rising inflation expectations and concerns over fiscal spending, said T. Rowe Price’s Arif Husain. Australia’s equivalent rose nine basis points in early trading.
Federal Reserve Bank of Kansas City President Jeffrey Schmid, in his first public remarks since August, said he favors a slower pace of interest-rate reductions given uncertainty about how low the US central bank should ultimately cut rates.
Oil climbed Monday as China moved again to bolster its economy and traders tracked the risk to supplies from tensions in the Middle East. It was steady early Tuesday.
In Asia, focus remains on Beijing’s efforts to boost growth in its struggling economy via stimulus. In the latest move, Chinese banks cut their benchmark lending rates after easing by the central bank at the end of September, part of a series of measures aimed at halting a housing market slump.
Japanese traders are keeping one eye on the runup to this coming weekend’s election. Support for Prime Minister Shigeru Ishiba’s ruling coalition is continuing to soften, indicating the possibility that the vote may result in a weakened and unstable administration.
Wall Street faces a big earnings hurdle this week, with roughly 20% of the S&P 500 companies scheduled to report, with traders gearing up for key results from Tesla Inc. to Boeing Co. and United Parcel Service Inc.
The latest Bloomberg Markets Live Pulse survey shows respondents see Corporate America’s results as more crucial for the equity market’s performance than who wins the November election or even the Federal Reserve’s policy path.
Nvidia Corp. hit a record high, with the Nasdaq 100 up 0.2%. The Russell 2000 retreated 1.6%. Homebuilders tumbled. United Parcel Service Inc. sank on a sell recommendation at Barclays Plc. Boeing Co. rallied after a tentative agreement with its workers’ union.
