Markets Overview
- ASX SPI 200 futures up 0.3% to 9,045.00
- Dow Average up 0.5% to 46,758.28
- Aussie down 0.2% to 0.6584 per US$
- US 10-year yield rose 3.7bps to 4.1192%
- Australia 3-year bond yield rose 0.7 bps to 3.55%
- Australia 10-year bond yield fell 0.4 bps to 4.33%
- Gold spot up 0.8% to $3,886.54
- Brent futures up 0.7% to $64.53/bbl
Economic Events
- 11:00: (AU) Sept. Melbourne Institute Inflation, prior -0.3%
- 11:00: (AU) Sept. Melbourne Institute Inflation, prior 2.8%
Australia and New Zealand will fast-track work on a more ambitious Single Economic Market, the program that aims to integrate their economies and reduce barriers for business.
The Japanese yen dropped after a ruling-party vote positioned pro-stimulus lawmaker Sanae Takaichi to become the country’s next leader. Tokyo shares are poised for gains in early trading.
Nikkei stock futures on the Chicago Mercantile Exchange jumped more than 4% on expectations that Takaichi’s policies will boost demand-driven shares. The yen weakened as much as 1.4% toward the closely watched 150 level against the dollar and neared a record low against the euro.
Oil advanced after OPEC+ agreed Sunday to revive just 137,000 barrels a day of halted supply — a slower pace than earlier this year. S&P 500 futures edged higher.
Takaichi is set to become Japan’s first female prime minister after winning the Liberal Democratic Party leadership contest Saturday. Investors had expected the seat to go to political scion Shinjiro Koizumi, who was seen as taking a more fiscally cautious view and leaving the BOJ to press ahead with normalization.
Takaichi instead advocated for expansionary fiscal policy and in a recent Kyodo survey said the BOJ should leave interest rates unchanged for now. While her appointment has lifted growth expectations, it has also raised concern over increasing bond supply while reducing chances of a Bank of Japan rate hike this month.
“It might be more of a positive surprise for equities,” said Anna Wu, cross-asset investment strategist at VanEck Australia. “I won’t be too surprised if the long-end yields go up a bit on Monday, given her overarching fiscal policy,” she said, while noting that Takaichi is unlikely to overstimulate, and volatility may be limited.
Elsewhere in Asia, futures contracts indicate Australian stocks may rise while those in Hong Kong may slip. Markets in mainland China remain closed for a holiday, while moves in Australia may be exacerbated by a public holiday in Sydney.
US equity futures rose after the benchmark S&P 500 closed little changed on Friday, weighed by a selloff in tech stocks. Bitcoin notched a fresh record at the weekend amid a broader risk rally around the US government shutdown and prevailing optimism around the cryptocurrency’s historical outperformance in the month of October, nicknamed ‘Uptober’.
Traders in Asia will also be focused on French bond futures after President Emmanuel Macron’s broadly unchanged cabinet sparked an immediate backlash from opposition parties. While most senior members from the cabinet of ousted premier Francois Bayrou were renamed to their posts, Roland Lescure was appointed finance minister and faces the task of passing a budget through a fractured parliament. The euro edged lower early Monday amid broad greenback strength.
