Markets Overview

  • ASX SPI 200 futures little changed at 8,672.00
  • S&P 500 up 0.6% to 7,519.12
  • Dow Average down 0.2% to 50,461.68
  • Aussie little changed at 0.7167 per US$
  • US 10-year yield fell 7.3bps to 4.4846%
  • Australia 3-year bond yield rose 3 bps to 4.55%
  • Australia 10-year bond yield rose 3 bps to 4.91%
  • Gold spot down 1.4% to $4,507.25
  • Brent futures up 3.5% to $99.50/bbl

Economic Events

  • 10:30: (AU) April Westpac Leading Index MoM, prior -0.09%
  • 11:30: (AU) April CPI YoY, est. 4.4%, prior 4.6%
  • 11:30: (AU) 1Q Construction Work Done, est. 0.8%, prior -0.1%
  • 11:30: (AU) April CPI Trimmed Mean MoM, est. 0.3%, prior 0.3%
  • 11:30: (AU) April CPI Trimmed Mean YoY, est. 3.4%, prior 3.3%
  • 11:30: (AU) April CPI MoM, est. 0.6%, prior 1.1%

Australia’s CPI report will probably show inflation easing in April, though still above the central bank’s 2%-3% target band, according to Bloomberg Economics.

Asian stocks were set to edge higher Wednesday in a sign traders were clinging to expectations the US and Iran will sign a peace deal even as military strikes in the Persian Gulf persisted.

Equity-index futures for Japan and mainland China were higher early Wednesday in Asia. Expectations of an agreement drove the S&P 500 to an all-time high close, with chipmakers leading the charge. Micron Technology Inc. surged 19% to top $1 trillion in market capitalization. The tech-heavy Nasdaq 100 Index climbed 1.8%, also closing at a record high.

Treasury yields fell as concerns over a flare-up in inflation eased, making traders pare back their wagers on near-term Federal Reserve interest-rate hikes. Brent rose to around $100 after sinking more than 7% on Monday, while a gauge of the dollar climbed 0.1%. A gauge of Chinese-listed shares in the US snapped a seven-day losing run and climbed 0.6%.

The moves reflected growing confidence the Middle East conflict will remain contained, with traders focusing on signs of diplomatic progress even as attacks continue. The risk-on mood has pushed global equities to fresh highs and eased some concerns that renewed inflation pressures could complicate the outlook for central-bank policy.

“Market participants are placing their bets on peace and subsequently buying into very strong equity fundamentals,” said Kyle Rodda at Capital.com.

President Donald Trump said talks to extend a ceasefire and reopen the Strait of Hormuz are proceeding. Secretary of State Marco Rubio cautioned that any accord would likely take a few days to finalize.

Still, security in the waterway remained unclear after the two sides exchanged strikes overnight and US Central Command pushed back on reports that suggested the military was helping escort vessels.

“While we’d like to share the optimism, there have been enough setbacks in the process of crafting an agreement between Washington and Tehran that we’ll remain cautious until there is more tangible progress,” said Ian Lyngen at BMO Capital Markets.

In Asia, data set for release Wednesday includes industrial profits in China, an interest rate decision in New Zealand and inflation in Australia. Japan is set to sell 40-year bonds, while markets are closed in Singapore, Indonesia and Malaysia.

Elsewhere, data showed US consumer confidence edged down in May as views of current economic conditions settled back amid rising prices due to the war. The Conference Board’s gauge fell to 93.1 after an upward revision to the prior month. The median economist estimate was 92.

“Given the current pricing pressures, we would have expected a more dramatic decline in confidence,” said Jeffrey Roach at LPL Financial. “However, consumers feel the employment situation will improve by the end of the year.”