Markets Overview

  • ASX SPI 200 futures down 0.4% to 8,601.00
  • S&P 500 down 0.7% to 7,353.61
  • Dow Average down 0.6% to 49,363.88
  • Aussie down 0.9% to 0.7107 per US$
  • US 10-year yield rose 7.8bps to 4.6643%
  • Australia 3-year bond yield fell 6.3 bps to 4.67%
  • Australia 10-year bond yield fell 5.4 bps to 5.06%
  • Gold spot down 1.9% to $4,481.98
  • Brent futures down 1.1% to $110.92/bbl

Economic Events

AustralianSuper Chief Platform Officer Mike Backeberg said AI would likely be deployed across both member services and investment operations, though different parts of the business would require different tools.

Asian stocks were set to follow Wall Street lower after mounting inflation concerns pushed the yield on the longest-dated US Treasury bond to its highest level since 2007.

Equity futures pointed to losses in Sydney, Hong Kong and Tokyo, while S&P 500 contracts were steady after the benchmark extended its drop from a record, marking its longest losing streak since late March. With oil holding above $100 and little sign of an easing in the Iran conflict, yields on 30-year Treasuries surged on concern elevated energy costs could push the Federal Reserve toward a hike rather than a cut. A gauge of the dollar closed at its highest in six weeks.

“The issue of rising bond yields is still something which could create problems for today’s expensive stock market,” said Matt Maley at Miller Tabak.

Fund managers have increased their allocations to stocks by the most on record, according to a Bank of America Corp. survey. Their exposure came close to triggering a “sell signal,” BofA’s Michael Hartnett said. With 73% of respondents long on semiconductor stocks, this was identified as the most-crowded trade.

While conditions for a long and painful downturn may not be in place, the high-profile group of chipmakers has come under intense volatility after a series of records fueled by the revival of the artificial-intelligence frenzy.

“Yes, we remain tactically bullish, but we would not be maximally net long given the elevated probability of a pullback led by tech,” said the JPMorgan Market Intelligence desk led by Andrew Tyler, adding dips will likely be bought.

The focus now will be on Nvidia Corp.’s results, due Wednesday after the closing bell.

The giant chipmaker’s earnings should take on greater importance at a time when the market is a bit tired and facing renewed worries about rising bond yields and the possibility of a Fed hike due to a resurgence of inflation, according to Paul Stanley at Granite Bay Wealth Management.

“Investors need some reassurance that the AI story is still alive and well and that the company is producing enough revenue growth to back up its elevated valuation,” he said. “We believe that Nvidia will report financial results that justify its valuation, which is just what the stock market is looking for.”

On the geopolitical front, President Donald Trump threatened to resume strikes on Iran in the coming days as part of the push for a deal to end the war. Meanwhile, NATO is discussing the possibility of helping ships pass through the Strait of Hormuz if the vital waterway isn’t reopened by early July.

In Asia, Russian President Vladimir Putin arrived in Beijing late Tuesday, aiming to reinforce ties with Chinese leader Xi Jinping and make progress on a long-stalled energy project.