Markets Overview
- ASX SPI 200 futures up 0.8% to 8,995.00
- S&P 500 down 0.1% to 6,644.94
- Dow Average up 0.4% to 46,272.62
- Aussie down 0.5% to 0.6484 per US$
- US 10-year yield fell 1.4bps to 4.0187%
- Australia 3-year bond yield fell 4.9 bps to 3.46%
- Australia 10-year bond yield fell 5.7 bps to 4.23%
- Gold spot up 0.8% to $4,141.19
- Brent futures down 1.9% to $62.13/bbl
Economic Events
- 10:30: (AU) Sept. Westpac Leading Index MoM, prior -0.04%
- 10:30: (AU) RBA’s Hunter-Speech
- 11:00: (AU) Australia to Sell A$800 Million 4.25% 2035 Bonds
RBA Assistant Governor Sarah Hunter and RBNZ Chief Economist Paul Conway speak at Citi conference in Sydney.
Asian stocks looked set to rebound in early trading, even as renewed trade tensions rattled Wall Street on Tuesday. US futures were steady.
Contracts for equity benchmarks in Sydney, Tokyo and Hong Kong all pointed to gains. The S&P 500 edged lower as President Donald Trump said he might stop trade in cooking oil with China, stoking fresh tensions between the world’s two largest economies. The dollar weakened as Federal Reserve Chair Jerome Powell signaled another rate cut and said the central bank may soon end the reduction of its balance sheet.
US Trade Representative Jamieson Greer predicted that heightened tensions with China over export controls would ease, following talks between representatives of the two countries. That followed the Asian nation’s sanctioning of US units of a South Korean shipping giant, escalating a dispute over maritime dominance.
“Since the tariff/trade issue is the one issue that has created problems for the stock market this year, we’ll all be watching the developments on this one very, very closely,” said Matt Maley at Miller Tabak.
Despite the slide in the US equity benchmark, a gauge of big banks jumped after solid results from financial giants — which unofficially kicked off the earnings season.
Oil was steady in early trading after falling to a five-month low on Tuesday, while gold opened little changed after rising for a third day. Silver plunged on Tuesday from an all-time high. Two-year yields hovered near the lowest levels since 2022.
To Michael Feroli at JPMorgan Chase & Co., Powell’s remarks were “strong confirmation” of bets on a Fed rate cut at its next meeting. At Evercore, Krishna Guha said Powell’s assessment of the outlook for the dual mandate objectives as largely unchanged confirms the Fed is on track to ease.
To Gennadiy Goldberg and Oscar Munoz at TD Securities, Powell cleared the path for an end to QT over the coming months. “We think the Fed will announce an end to balance sheet runoff at the October FOMC meeting.”
The strategists also said the balance sheet is likely to remain steady for some time, but a high-pressure year-end can change that, leading the Fed to consider resuming active purchases of Treasury bills as soon as 2026.
“Ending QT should be supportive of swap spreads, provide more capacity in funding markets, and lower term premium across the curve,” they noted. “We continue to expect the Fed to cut rates in October and December, and to deliver three more cuts in 2026 for a terminal rate of 3%.”
Swap contracts are pricing in roughly 1.25 percentage points of rate cuts by the end of next year, from the current range of 4%-4.25%.
Meanwhile, a record share of global fund managers said artificial intelligence stocks are in a bubble following a torrid rally this year, according to a survey by Bank of America Corp.
About 54% of participants in the October poll indicated tech stocks were looking too expensive, an about-turn from last month when nearly half had dismissed those concerns. Fears that global stocks were overvalued also hit a peak in the latest survey.
