Markets Overview
- ASX SPI 200 futures up 0.3% to 8,563.00
- S&P 500 up 1.4% to 6,698.35
- Dow Average up 0.4% to 46,444.62
- Aussie up 0.1% to 0.6463 per US$
- US 10-year yield fell 3.0bps to 4.0344%
- Australia 3-year bond yield fell 1.4 bps to 3.74%
- Australia 10-year bond yield fell 1.9 bps to 4.44%
- Gold spot up 1.3% to $4,119.57
- Brent futures up 1.2% to $63.34/bbl
Economic Events
- 11:00: (AU) Australia to Sell A$400 Million 4.25% 2034 Bonds
New Zealand’s central bank is expected to cut interest rates on Wednesday and leave the door open for further reductions in 2026 if the economy fails to gather momentum.
Technology stocks propelled an advance in global equities as traders kicked off a data-packed week more optimistic that the Federal Reserve will cut interest rates in December.
The S&P 500 rose 1.5% and the tech-heavy Nasdaq 100 ended Monday’s session more than 2% higher. While the former notched its best day in six weeks, the latter gained the most since May.
Bitcoin reversed an earlier drop. The US 10-year Treasury yield declined to 4.03%. Oil pushed higher as traders weighed the prospect of a Ukraine-Russia peace deal.
Federal Reserve Governor Christopher Waller fueled optimism on Monday after indicating support for a rate cut next month. New York Fed President John Williams had a similar impact on the market on Friday after he said a near-term rate cut remains a possibility. San Francisco Fed President Mary Daly also backs lowering rates in December, she said in an interview on Monday. While the central bank’s December meeting is the next big milestone for markets, investors are relying on dated economic data due to delays caused by the US shutdown.
There’s room for different interpretations on how the economy is doing because of ambiguity in the data given the lag, James Egelhof, chief US economist at BNP Paribas, said on Bloomberg Television Monday.
“It’s a more disorderly process than what we’re accustomed to,” he said. “At the same time, we think that Powell wants to keep cutting. He has the votes to do that. We think the data is giving a little cover to him to deliver one last rate cut to protect the labor market from gradual deterioration.”
Money markets are pricing in a more than 70% chance of a Fed rate cut in December, after the odds fluctuated in recent weeks amid growing fissures among policymakers and the data blackout.
US stocks are gaining on Monday after a volatile week marked by concerns about lofty AI valuations and lack of clarity regarding the Fed’s path ahead. UBS Securities’ trading desk now thinks the selloff in US stocks may have run its course, especially with expectations for the Fed lowering rates next month seemingly back on track.
“I believe the combination of a reset of the equity market and the increased odds of a rate cut in December has propelled stocks higher and put the year end melt-up back on the table,” said Chris Murphy, Susquehanna International Group’s co-head of derivatives strategy.
Even so, Ed Yardeni, founder of Yardeni Research, says the S&P 500 won’t reach his year-end target of 7,000 points until next year because of investors taking profits in AI-related stocks. His target for the index is one of the highest among Wall Street strategists.
