Markets Overview
- ASX SPI 200 futures up 1.1% to 8,519.00
- S&P 500 up 1% to 6,602.99
- Dow Average up 1.1% to 46,245.41
- Aussie up 0.3% to 0.6459 per US$
- US 10-year yield fell 2.0bps to 4.0633%
- Australia 3-year bond yield fell 1.4 bps to 3.75%
- Australia 10-year bond yield fell 0.5 bps to 4.46%
- Gold spot down 0.3% to $4,065.14
- Brent futures down 1.3% to $62.56/bbl
Economic Events
Asian markets look set for a positive open, supported by improved sentiment over potential Federal Reserve rate cuts and reports that US officials may permit the sale of Nvidia AI chips to China.
Futures indicate shares in Australia and Hong Kong will climb in early trading after the S&P 500 closed 1% higher on Friday. China’s benchmark may be buoyed by advances in a gauge of US-listed counterparts on Friday, while Japanese markets are closed for a holiday.
Risk sentiment improved on Wall Street after Bloomberg News reported US officials are having early talks on whether to let Nvidia sell its H200 artificial intelligence chips to China. The market also got an injection of hope after Fed Bank of New York President John Williams suggested a near-term rate cut remains a possibility.
“Expect Asian markets to start on the front foot,” said Nick Twidale, chief market analyst at AT Global Markets. “But given the moves that we saw last week, and the potential for more volatility in the coming days, investors will be understandably hesitant to throw the kitchen sink on positive risk sentiment.”
Markets saw a resurgence in volatility last week, with uncertainty over the Fed’s ability to cut rates also unsettling investors, leading the dollar to notch its best weekly advance in a month. Assets favored by retail momentum traders like crypto and AI winners saw wild swings, with the selloff in Asian tech stocks causing the MSCI Asia-Pacific Index to drop the most since April.
US debt climbed on Friday after Williams, seen as a close ally to Chair Jerome Powell, said he sees room to ease policy in the near term, as downside risks to employment have increased while upside risks to inflation have eased. While traders boosted bets on a December cut, officials remain split on whether to lower rates, with Boston Fed chief Susan Collins indicating her mind isn’t made up about a policy move.
Elsewhere, the euro and pound were steady as fiscal pressures in Europe also take focus. France’s National Assembly rejected part of the 2026 budget in the early hours of Saturday morning, highlighting the uncertainties surrounding Prime Minister Sebastien Lecornu’s approach to tackling the bloated deficit.
The UK government at the weekend said it would freeze rail fares in the budget due Wednesday. It’s one of several affordability measures expected as Chancellor of the Exchequer Rachel Reeves seeks to offset the political pain of having to raise as much as £25 billion ($33 billion) in tax hikes and spending restraint to stabilize the UK’s public finances.
“The spending cuts and revenue raising measures must be judged by the market to be credible,” Commonwealth Bank of Australia strategists led by Joseph Capurso wrote in a note to clients. “The risk is the budget will be judged unfavorably, raising UK government bond yields and weighing on GBP/USD.”
In commodities, oil fell Friday as traders assessed the prospect of a Ukraine-Russia peace deal that would add supply to a saturated market. Gold closed slightly lower.
