Markets Overview

  • ASX SPI 200 futures up 0.7% to 8,033.00
  • Dow Average up 1.8% to 40,954.48
  • Aussie down 0.4% to 0.6734 per US$
  • US 10-year yield fell 7.4bps to 4.1557%
  • Australia 3-year bond yield fell 7.5 bps to 3.97%
  • Australia 10-year bond yield fell 7.5 bps to 4.25%
  • Gold spot up 1.9% to $2,468.92
  • Brent futures down 1.3% to $83.74/bbl

Economic Events

  • 10:30: (AU) June Westpac Leading Index MoM, prior -0.01%
  • 11:00: (AU) Australia to Sell A$500 Million 3% 2033 Bonds

Asian equities were set to join a global stock rally as bets the Federal Reserve will soon start cutting rates fueled a rush into riskier corners of the market.

Equity futures for Japan, Australia and Hong Kong all rallied Wednesday after US shares advanced to fresh highs, pushing global stocks to a new peak.

Gains in the US were marked by a rotation into smaller stocks. The small-capitalization Russell 2000 Index is up 12% in the last five sessions, something it hasn’t done since April 2020.

“Rotation is the name of the game,” said Andrew Brenner at NatAlliance Securities. “This is consistent with the increased perception of cutting rates.”

Brenner highlighted the fact that around 4 a.m. New York time on Tuesday, Russell 2000 futures spiked — while contracts on the Nasdaq 100 slipped. “This means that overseas money, big money, made a very large rotation trade overnight,” he said.

Treasuries rallied across the curve Tuesday. The 10-year yield fell seven basis points, while the policy-sensitive two-year yield fell by four. The dollar was little changed. The yen was steady early Wednesday after two daily declines against the greenback.

Other News

Rest, one of Australia’s largest pension funds, has invested A$400 million ($270 million) in Metrics Credit Partners’ real estate private credit fund.

The allocation is part of Rest’s plan to diversify its private markets exposure and capitalize on favorable interest rates for non-bank lenders, it said in a statement last week. The A$85 billion fund disclosed the amount of the Metrics investment to Bloomberg News on Monday.

Pension funds including AustralianSuper, Australian Retirement Trust and Cbus have lifted their private credit exposure or are looking to allocate more. The country’s A$3.9 trillion industry has plowed into private markets in recent years as it seeks to invest record amounts of inflows.

Australian asset manager Metrics’ fund provides commercial property loans to residential and industrial projects. The firm is one of a growing number of international and domestic private credit lenders such as Qualitas Ltd. and Apollo Global Management.-backed MaxCap Group Pty that are filling a funding void left by banks who’ve been hit by tighter capital regulation.

Recent market entrant PGIM Inc. is raising a A$750 million Australian real estate debt fund, its first in the Asia region.

(Bloommberg)