Markets Overview

  • ASX SPI 200 futures up 0.2% to 8,747.00
  • S&P 500 up 0.2% to 7,412.84
  • Dow Average up 0.2% to 49,704.47
  • Aussie little changed at 0.7249 per US$
  • US 10-year yield rose 5.7bps to 4.4114%
  • Australia 3-year bond yield rose 1.6 bps to 4.67%
  • Australia 10-year bond yield rose 0.4 bps to 4.99%
  • Gold spot up 0.4% to $4,735.20
  • Brent futures up 3.0% to $104.31/bbl

Economic Events

  • 11:30: (AU) April NAB Business Conditions, prior 6
  • 11:30: (AU) April NAB Business Confidence, prior -29

Australian Treasurer Jim Chalmers will hand down his fiscal blueprint at around 7:30 p.m. in Canberra. The budget is expected to show a narrower underlying cash deficit than forecast six months ago. RBNZ Governor Anna Breman will speak on a panel at IMF/SNB conference.

Asian stocks looked set to rise as traders stayed bullish on the AI trade even as the US and Iran failed to reach any peace deal. Oil climbed and Treasuries fell.

Equity-index futures for Australia, Japan and South Korea pointed to gains at the open after Wall Street benchmarks posted modest advances to set up a record close. West Texas Intermediate crude held above $98 a barrel Tuesday after President Donald Trump said the ceasefire with Iran was on “massive life support” and rejected the Islamic Republic’s latest peace proposal.

The Treasury market, which has priced out the odds of rate cuts by the Federal Reserve this year, saw an increase in yields. The 10-year Treasury yield climbed six basis points to 4.41%, with investors getting a read on US inflation Tuesday.

Solid US earnings have driven a fresh round of upgrades to Wall Street’s year-end targets for the S&P 500, as investors bet corporate profits can sustain the rally despite lingering Middle East tensions. Global equities have erased losses tied to the Iran conflict and have climbed to records, supported by expectations that heavy spending on artificial intelligence, particularly in Asia, will underpin earnings growth.

“Markets are pricing both AI-driven growth and the Middle East supply shock,” said Jean Boivin, head of BlackRock Investment Institute. He said the buildout of AI data centers is offsetting the oil supply shock’s “drag on growth.”

The fragile ceasefire in the Middle East appeared to waver, with Trump calling Iran’s response to his peace proposal a “piece of garbage” and that he “didn’t even finish reading it.”

Trump didn’t indicate whether the US would resume military attacks on Iran as he previously has threatened if the Islamic Republic’s leadership didn’t agree to his terms. Trump told Fox News earlier on Monday that he’s looking at reviving a plan to escort ships through the Strait of Hormuz.

“An agreement remains elusive and risks remain elevated,” said Mark Haefele at UBS Chief Investment Office. “Both sides remain under pressure to conclude a deal.”

Investor attention will also turn to Tuesday morning’s CPI report to gauge the war’s impact on inflation. Goldman Sachs Group Inc. and Bank of America Corp. were the latest in a growing cohort of Wall Street banks pushing back their forecasts for rate cuts, arguing that both inflation and jobs data make a case for the Fed to stay on hold until at least the end of the year.

While the Iran conflict has dragged on, the strength of first-quarter earnings surprises has now led multiple Wall Street strategists to raise their full-year targets on the S&P 500.

CFRA upped their target on resilient consumer spending and AI-related investment, while Yardeni Research Inc. now has the highest estimate on Wall Street among strategists tracked by Bloomberg.

Still, some on Wall Street are also concerned that elevated oil prices and fears about potential shortages could derail the rally.

Morgan Stanley warned Monday that the oil market is in a “race against time” and that prices could move sharply higher if the Strait of Hormuz remains closed into June.

“The biggest concern is we’ve had a buffer on energy prices and there are arguments about when that stops out. When do we hit the bottom of the tanker and when does this really become an issue,” Sarah Hunt, chief market strategist at Alpine Saxon Woods, said in an interview with Bloomberg Television.