Markets Overview

  • ASX SPI 200 futures little changed at 8,230.00
  • Dow Average down 1.0% to 41,943.09
  • Aussie down 0.6% to 0.6755 per US$
  • US 10-year yield rose 5.8bps to 4.0256%
  • Australia 3-year bond yield little changed at 3.61%
  • Australia 10-year bond yield little changed at 4.07%
  • Gold spot down 0.4% to $2,643.18
  • Brent futures up 3.9% to $81.12/bbl

Economic Events

  • 10:30: (AU) Oct. Westpac Consumer Conf Index, prior 84.6
  • 10:30: (AU) Oct. Westpac Consumer Conf SA MoM, prior -0.5%
  • 11:30: (AU) Sept. NAB Business Conditions, prior 3
  • 11:30: (AU) Sept. NAB Business Confidence, prior -4
  • 11:30: (AU) Sept. ANZ-Indeed Job Advertisements , prior -2.1%
  • 11:30: (AU) RBA Minutes of Sept. Policy Meeting
  • 12:00: (AU) RBA’s Hauser-Remarks
  • 16:30: (AU) Sept. Foreign Reserves, prior A$96.2b

A selloff in some of the world’s largest technology companies dragged down stocks, extending a slide that was also driven by geopolitical angst and bets the Federal Reserve will opt for a smaller rate cut next month.

The S&P 500 fell 1% after notching a four-week winning run. Alphabet Inc. sank 2.4% as a judge ruled it must lift restrictions that prevent developers from setting up rival marketplaces that compete with its Google Play Store. Brent crude jumped above $80 a barrel amid mounting tensions in the Middle East. In the wake of Friday’s solid jobs data, Treasuries continued to drop — with the 10-year yield topping 4%.

“Friday’s strong jobs report not only appeared to kill any chance of a 50-basis-point rate cut in November, it kickstarted chatter about the Fed leaving rates unchanged if economic data continues to come in hotter than expected,” said Chris Larkin at E*Trade from Morgan Stanley. “But as last week showed, geopolitics can’t be ignored.”

To Dave Sekera at Morningstar, if there is any further geopolitical escalation, that would potentially spur the risk-off trade — with growth shares underperforming value ones.

“Typically, in a risk-off trade, you’re going to see rotation into defense stocks, but I’d be careful if you’re an investor today,” he said. “Some of the defensive sectors today are already overvalued. Unlike a typical risk-off trade, I think oil stocks would go up.”

With the exception of energy shares, every major sector in the S&P 500 dropped Monday. A gauge of the “Magnificent Seven” megacaps slipped 1.9%. Amazon.com Inc. sank 3.1% after Wells Fargo Securities downgraded the shares. Apple Inc. slid 2.3% as a Jefferies analyst said investors have overly optimistic expectations for the latest iPhones. Nvidia Corp. gained.

Wall Street’s favorite volatility gauge – the VIX – jumped to a two-month high. Treasury 10-year yields rose six basis points to 4.02%. West Texas Intermediate crude climbed 3.9% to $77.30 a barrel.