Markets Overview
- ASX SPI 200 futures down 0.2% to 8,626.00
- S&P 500 little changed at 6,734.11
- Dow Average down 0.7% to 47,147.48
- Aussie little changed at 0.6533 per US$
- US 10-year yield rose 2.9bps to 4.1483%
- Australia 3-year bond yield fell 3.5 bps to 3.76%
- Australia 10-year bond yield rose 1.8 bps to 4.44%
- Gold spot down 2.1% to $4,084.06
- Brent futures up 2.2% to $64.39/bbl
Economic Events
Asian markets look set for a cautious start as investors brace for a barrage of US economic data amid lingering uncertainty over the Federal Reserve’s policy path. Bitcoin erased its gains for the year.
Futures point to modest declines in Australia and Hong Kong when trading begins Monday, while Japanese shares may edge higher. The yen held steady ahead of third quarter growth data. US shares closed little changed on Friday as investors stayed on the sidelines ahead of economic reports delayed by the government shutdown.
After weeks of limited data, investors will finally get fresh signals on the health of the US economy as agencies begin releasing key indicators, including the September employment figures on Thursday. Traders are also navigating a mix of risks — from stretched valuations in AI-related stocks to renewed strains in relations between China and Japan. Risk appetite is fading, with Bitcoin sliding below $94,000 and wiping out its year-to-date advance.
“November so far has seen a pretty wobbly ride for shares,” Shane Oliver, chief economist and head of investment strategy at AMP Ltd. wrote in a note to clients. “Share markets remain at risk of a correction given stretched valuations, risks around US tariffs and the softening US jobs market.”
A slew of Fed officials have expressed skepticism over the need for a cut in December, or outright opposed one, less than a month after Chair Jerome Powell warned that a December cut is far from a “foregone conclusion.” Investors have marked down the odds of a cut next month to less than 50% from almost fully pricing in a reduction before the Fed’s Oct. meeting.
“While there will be questions about data quality, market participants will react to new information” and weigh the dollar, Commonwealth Bank of Australia strategists led by Joseph Capurso wrote in a note to clients. “We expect the non-farm payrolls report for September to underperform expectations of a 50,000 increase.”
The yen was steady in early trading ahead of Japanese third quarter growth data which may provide justification for Prime Minister Sanae Takaichi compiling a hefty stimulus package. Japan’s real gross domestic product is forecast to contract by 2.4% in the three months through September on an annualized basis, the first decline in six quarters, according to economists’ estimates.
The potential for stimulus and a reduction in rate hike expectations following Takaichi’s appointment has placed fresh pressure on the yen. The currency slid to its weakest in nine months last week, leading to official warnings that moves have become one-sided. Any further weakening may increase angst over possible government intervention with the currency near levels that previously drew authorities into the market.
“Technically, USD/JPY is approaching levels where Japanese currency officials are expected to begin to verbally intervene more aggressively,” Tony Sycamore, a strategist at IG Markets, wrote in a note. “However, actual physical intervention is unlikely until the exchange rate reaches around 160 or higher, given the dovish stance of the new Japanese Prime Minister.”
In commodities, oil jumped 2.4% Friday to settle above $60 per barrel after Ukraine attacked a key Russian oil port and Iran seized a tanker near the Strait of Hormuz, injecting a fresh geopolitical premium into prices. Gold slid 2.1% as optimism over Fed cuts waned.
