Markets Overview
- ASX SPI 200 futures up 0.2% to 8,559.00
- Dow Average up 0.9% to 44,494.94
- Aussie little changed at 0.6583 per US$
- US 10-year yield rose 1.5bps to 4.2436%
- Australia 3-year bond yield rose 0.1 bps to 3.26%
- Australia 10-year bond yield fell 4.5 bps to 4.12%
- Gold spot up 1.1% to $3,338.91
- Brent futures up 0.7% to $67.24/bbl
Economic Events
- 11:00: (AU) Australia to Sell A$1.2 Billion 2.75% 2035 Bonds
- 11:30: (AU) May Building Approvals MoM, est. 4.0%, prior -5.7%
- 11:30: (AU) May Retail Sales MoM, est. 0.5%, prior -0.1%
- 11:30: (AU) May Private Sector Houses MoM, prior 3.1%
Japanese shares were poised for a second day of losses after President Donald Trump renewed threats to hike tariffs on the country and ruled out delaying the July 9 deadline for imposing higher levies on trading partners.
Futures for the Nikkei-225 dropped 0.8% after the benchmark logged its steepest drop in a month on Tuesday. The S&P 500 fell after Trump’s comments, closing 0.1% lower. The dollar touched its lowest since 2022 while bond yields rose as jobs data dimmed the outlook for rate cuts by the Federal Reserve.
Investors are closely watching how Trump decides to handle the current pause on his April tariffs, which he put on hold for 90 days to allow time for talks. The president on Tuesday deepened his criticism of Japan for not accepting US rice exports, and also said that auto trade between the two nations is imbalanced.
Trump for weeks has sought to exert leverage over trading partners with threats to set high levies on governments he sees as being difficult. His top economic adviser, Kevin Hassett, earlier signaled agreements would be announced after the July 4 holiday and the signing of the tax and spending bill the US Senate approved.
Meanwhile, Fed Chair Jerome Powell repeated that the US central bank probably would have cut rates further this year absent Trump’s expanded use of tariffs, although he didn’t rule out easing at its meeting later this month.
In US stocks, traders drove a rotation out of the tech megacaps that had powered the S&P 500 from the brink of a bear market. While the benchmark barely budged after notching all-time highs, a violent rotation took place at the start of July, with money chasing losers at the expense of recent winners.
US job openings hit the highest since November, largely fueled by leisure and hospitality, and layoffs declined. Fed policymakers have consistently characterized labor-market conditions as strong in recent weeks.
The government’s June employment report, due Thursday, is expected to show a slowdown in nonfarm payroll growth and an uptick in the unemployment rate.
“Federal Reserve interest-rate policy is likely on hold for now,” said Josh Hirt at Vanguard. “If the labor market remains on the trajectory we expect, the Fed can afford to be patient. We anticipate the Fed will be able to make two more rate cuts later this year in this environment.”
Separate data Tuesday showed US factory activity contracted in June for a fourth consecutive month as orders and employment shrank at a faster pace, extending the malaise in manufacturing.
Meantime, Trump’s $3.3 trillion tax and spending cut bill passed the Senate after Vice President JD Vance’s tie-breaking vote. House lawmakers are returning to Washington from a holiday week to vote Wednesday on the Senate version of the bill but face Republican resistance from moderate and ultra-conservative GOP lawmakers.
