Markets Overview
- ASX SPI 200 futures little changed at 7,779.00
- Dow Average up 0.1% to 38,834.86
- Aussie up 0.7% to 0.6656 per US$
- US 10-year yield fell 5.8bps to 4.2227%
- Australia 3-year bond yield rose 5.6 bps to 3.85%
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Economic Events
- 11:00: (AU) Australia to Sell A$800 Million 2.75% 2035 Bonds
A rally in chipmakers drove stocks to another record, with traders betting the potential for Federal Reserve rate cuts will keep fueling the industry that has powered the equity market this year.
The S&P 500 came closer to the historic 5,500 mark. Nvidia Corp. became the world’s most-valuable company — topping Microsoft Corp. — to extend this year’s record-breaking surge. A bullish analyst call projected the firm at the heart of the artificial-intelligence boom will hit nearly $5 trillion in value in the coming year — from about $3.3 trillion. Bonds climbed as traders piled into a $13 billion sale of 20-year Treasuries.
Wall Street waded through mixed economic data that showed US industrial production increased, helped by a broad-based pickup in factory output. Separately, retail sales barely rose and prior months were revised lower. A chorus of Fed officials emphasized the need for more evidence of cooling inflation before lowering rates.
On the eve of a US holiday, the S&P 500 hit its 31st all-time high of 2024. Treasury 10-year yields fell seven basis points to 4.21%.
Other News
Concerns among pilots about a possible mid-air collision are spilling over in Australia as a shortage of air traffic controllers leaves airport towers unmanned, forcing passenger jets to fend for themselves.
There are currently no overnight air traffic control services at Darwin, a northern gateway for carriers including Qantas Airways Ltd. and Virgin Australia. Schedules show that at around midnight almost every day, more than a dozen flights have to arrive or depart with almost no guidance from the ground.
On Australia’s northeast coast, the airport at Townsville — a popular jumping off point for the Great Barrier Reef — doesn’t staff its control tower at weekends. Almost 50 commercial services have to coordinate their own landings or takeoffs on Sunday alone.
The labor crisis on the ground is adding risk in the air during the post-Covid travel boom, with flight crews taking on the task of distancing their planes from other air traffic — a responsibility that ordinarily lies with air traffic controllers. Pilots say landing without direction from a tower removes an important layer of security at a critical period of the flight.
Concerned crews are blowing the whistle after a surge in passenger traffic. Airlines have scheduled 866 flights into Darwin this month, the most this year, up from a Covid-era low of 171 in May 2020, according to Cirium data. Runway construction work at the airport that restricts plane movements is making landing and taking off without help even more complicated, pilots say.
In a statement, the Civil Aviation Safety Authority said it’s “satisfied that the arrangements between 10 p.m. and 6 a.m. are safe for the anticipated traffic mix” at Darwin. The regulator said it’s working with the defence department, which is responsible for air traffic control at Darwin, to “support a return to the previous service levels.” The defence department didn’t respond to a request for comment.
A spokesperson for Airservices Australia, the government agency that manages airspace, said “rosters are tight in some areas” but “safety is never compromised.” The organization has recruited and trained 100 new air traffic controllers since 2020 and more than 70 others will join in the 2025 fiscal year, it said.
Like the rest of the aviation industry, air traffic controllers worldwide took a blow during the pandemic, with many laid off when international travel ground to a halt. Employment levels in a sector that’s essential to keeping aviation safe have failed to keep pace with the swift recovery in air travel.
The depleted ranks have been in the spotlight globally after a spate of close calls on runways in the US, including a near collision at Ronald Reagan Washington National Airport in April between a JetBlue Airways Corp. flight and a Southwest Airlines Co. plane. In January, a fiery crash on the tarmac at Tokyo killed five people.
Safety concerns among air traffic controllers themselves in Sydney — Australia’s main aviation gateway — emerged early last year when staff submitted at least 15 confidential reports to the transport safety investigator. Some warned that an accident was almost inevitable unless the manpower deficit was addressed.
As recently as last week, flight-planning notices for pilots warned that control tower operating hours at airports across Australia were subject to “post-Covid Airservices staffing shortages.” The list included the airports of the nation’s capital, Canberra, and Hobart.
“Without air traffic control, the chance of errors by any one aircraft or pilot increases, and the ability to identify and correct those errors is dramatically reduced,” said Tony Lucas, a senior Qantas pilot who’s also president of the Australian and International Pilots Association. “We want to see normal operations resume as soon as possible.”
In Australia, a vast country where air travel is just about unavoidable, it’s common for small aerodromes or remote airstrips to operate on their own. But pilots converging on Darwin, where there’s no air traffic control from 10 p.m. until 6 a.m. most nights, describe a late-night airspace busy with commercial flights, military aircraft and small medical evacuation planes.
One Boeing Co. 737 captain, a 20-year Qantas veteran, said he was relieved to land safely there in early April shortly after midnight without air traffic control. He spoke anonymously because of the sensitivity of the subject. Under those conditions, said the pilot, an accident would come as no surprise.
That same month, the Australian Airline Pilots’ Association was so concerned that it issued a safety bulletin on the matter. The body warned there’s a higher risk of a mid-air collision in areas of uncontrolled airspace because not all aircraft are equipped with crash-avoidance systems. The alert was distributed to professional pilot bodies worldwide.
Qantas declined to comment, but pointed to its recent submissions to an Australian parliamentary transport committee.
In a May 14 letter to the committee, Qantas said “for safety reasons” its jets avoid uncontrolled airspace unless there’s no other option. Making pilots responsible for so-called self-separation in the air “was once an extremely rare event – almost unheard of in Australian airspace and even in a global context,” the airline said.
Now, it’s commonplace.
Some 1,600 Qantas group flights in 2023 were delayed because normal air traffic services were unavailable, the carrier told the committee. Almost 400 flights ran late in the first four months of this year for the same reason. The airline called for “additional regulatory oversight” of Airservices Australia.
Virgin Australia declined to comment but it told the same parliamentary transport committee last month that air traffic control was withdrawn on 810 occasions between Jan. 1, 2022 and April 24, 2024. Those incidents occurred both mid-flight and as aircraft were approaching Australian airports.
At Darwin Airport, there will be no overnight service until at least November this year, according to instructions for pilots on the Airservices Australia website. The restrictions were put in place in July 2022.
The dense cluster of flight arrivals and departures at Darwin either side of midnight point to the challenges of maintaining mid-air separation. As many as 16 flights operated by Qantas, Jetstar and Virgin land or depart inside a window of about two hours, well after Darwin’s control tower has closed, according to the airport’s flight timetable.
The Qantas pilot who spoke anonymously said the last time he approached Darwin Airport, he received an overview of nearby flights from an area controller, allowing him to build a picture of the situation in the air. He then contacted other aircraft to ensure they were distanced — vertically and horizontally — and wouldn’t be landing at the same time.
He touched down without incident after getting on the plane’s Wifi and checking Flightradar24, a site more typically monitored by aviation enthusiasts on the ground. Many jets do not have Wifi.
It’s not as if government bodies aren’t aware of long-standing concerns among pilots and air traffic controllers.
The Australian Transport Safety Bureau in March 2023 published an anonymous confidential submission, apparently from an air traffic controller, which highlighted a lack of understanding among controllers and flight crews about what to do in uncontrolled airspace. The situation was “an accident waiting to happen,” the person said.
Three months later, the safety bureau said air traffic controllers had made “a large number” of confidential reports in the preceding four months. Fifteen of them related to operations in Sydney. There had been just one in the previous five years.
Excerpts from those submissions, published by the bureau, point to widespread concerns about staffing levels and procedures in Sydney. One controller warned it was “only a matter of time before the current practices at Airservices result in a major aviation incident.” Another said it would take years to fix the labor crisis. At the time, Airservices denied there were shortages in Sydney.
Meanwhile, another Boeing 737 pilot familiar with the current restrictions at Darwin says the airport is too busy to run without full-time air traffic control. Airservices Australia has had ample time to fill holes in its workforce, the Australian airline pilot said, speaking anonymously because he isn’t authorized to speak to media.
The situation at Darwin is as bad as he’s known, said the pilot, who’s also flown for around two decades.
(Bloomberg)
