Markets Overview

  • ASX SPI 200 futures little changed at 8,842.00
  • S&P 500 down 0.6% to 6,753.85
  • Dow Average down 0.5% to 47,077.53
  • Aussie down 0.3% to 0.6485 per US$
  • US 10-year yield fell 6.8bps to 4.0909%
  • Australia 3-year bond yield rose 3.1 bps to 3.66%
  • Australia 10-year bond yield rose 5.3 bps to 4.37%
  • Gold spot up 0.2% to $3,986.81
  • Brent futures down 0.2% to $63.41/bbl

Economic Events

  • 11:00: (AU) Australia to Sell A$800 Million 3% 2033 Bonds
  • 16:30: (AU) Oct. Foreign Reserves, prior A$107.1b

Volatility lashed Wall Street, with strong evidence of a cooling labor market pushing high-valuation tech stocks and crypto to big losses while bonds rallied on bets the Federal Reserve will cut rates.

Equities sold off for the second time in three days and 10-year yields tumbled the most in a month following Challenger, Gray & Christmas Inc. data showing the largest October job cuts in more than 20 years. The Nasdaq 100 slumped 1.9%, and a closely watched volatility index briefly hit 20.

While bets on Fed cuts have powered the bull market alongside the artificial-intelligence boom, concerns over lofty valuations have surfaced. Technical indicators are flagging reasons for caution while worries about a narrowing cohort of stocks driving gains have become louder.

If anything, the slide in equities appears to be taking some “froth” out of the market, according to Chris Murphy at Susquehanna International Group LLP.

“Risk off again,” said Fawad Razaqzada at Forex.com. “It goes to show it is not always about rate cut bets, and reality is starting to bite. Frankly, the market needed this reality check. After months of AI-fueled exuberance, traders are rediscovering that fundamentals still matter.”

Investors also kept a close eye on policymakers speaking Thursday.

Fed Bank of Cleveland President Beth Hammack said inflation is a bigger risk than job weakness. Her Chicago counterpart Austan Goolsbee told CNBC that a lack of inflation data during the shutdown makes him uneasy about rate cuts. Governor Michael Barr said officials still have work to do on inflation while ensuring the labor market is solid.

The S&P 500 fell 1.1%. Nvidia Corp. and Tesla Inc. led losses in megacaps. The UBS US AI Winners Index sank about 3%.

The yield on 10-year Treasuries slid seven basis points to 4.09%. Money markets are now implying a better than 60% chance of a Fed cut next month. A dollar gauge dropped 0.3%. Bitcoin sank 2.5%.