Markets Overview

  • ASX SPI 200 futures down 0.2% to 8,637.00
  • S&P 500 up 0.6% to 7,444.25
  • Dow Average down 0.1% to 49,693.20
  • Aussie up 0.2% to 0.7258 per US$
  • US 10-year yield little changed at 4.4688%
  • Australia 3-year bond yield rose 0.5 bps to 4.72%
  • Australia 10-year bond yield rose 3 bps to 5.06%
  • Gold spot down 0.6% to $4,688.68
  • Brent futures down 1.9% to $105.68/bbl

Economic Events

  • 10:30: (AU) Australia to Sell A$1 Billion 84-Day Bills on May 14
  • 10:30: (AU) Australia to Sell A$1 Billion 133-Day Bills on May 14
  • 11:00: (AU) May Consumer Inflation Expectation, prior 5.9%

Stocks in Asia were set to climb Thursday after a surge in US technology shares pushed Wall Street to fresh highs, masking worries about inflation that have driven bets the Federal Reserve will raise interest rates next year.

Equity-index futures for Japan and South Korea advanced after US benchmarks closed at record highs, led by technology shares. A strong outlook by Cisco Systems Inc. lifted Nasdaq 100 contracts 0.4%, reinforcing the bullish sector narrative. The company’s shares surged 18% in extended trading.

Chinese equities were set for a 1% advance, with attention on the summit between President Donald Trump and Xi Jinping in Beijing. Technology shares will be closely watched after Alibaba Group Holding Ltd. and Tencent Holdings Ltd. posted revenue that missed estimates.

A drop in oil also helped sentiment on Wednesday, while a $25 billion sale of 30-year bonds saw investors snagging 5% yields on those maturities for the first time since 2007. An index of the dollar was fractionally higher Wednesday, while gold fell for a second session. Investors fled Treasuries after back-to-back US inflation reports this week showed mounting price pressures.

“Attention now turns to ongoing geopolitical headlines with President Trump continuing his visit to China and markets remaining highly sensitive to any developments surrounding the Strait of Hormuz,” Nick Twidale, chief market analyst at AT Global Markets, wrote in a note to clients.

US stocks have hit records despite growing concern that the war in Iran will keep inflation elevated and weigh on the global economy. Investors have been balancing renewed price pressures against strong corporate earnings and optimism that AI-driven spending will continue to support economic growth and fuel gains in equities.

Meanwhile, Trump arrived in Beijing for the first state visit to China by a US leader in nine years, as the world’s two largest economies look to stabilize ties with a summit playing out against the backdrop of the Iran war.

Trump is scheduled to meet with Chinese President Xi Jinping at the Great Hall of the People on Thursday morning.

Elsewhere, back-to-back US inflation reports this week have shown mounting price pressures, pushing traders to boost wagers on a Fed rate hike in the coming year. The yield on benchmark 10-year Treasuries rose to the highest since July.

US wholesale inflation accelerated in April to the fastest pace since 2022 on a war-driven increase in energy prices that’s feeding into higher freight transportation costs. The producer price index rose 6% from a year ago, according to Bureau of Labor Statistics data out Wednesday, eclipsing economist estimates and coming in after a hot consumer price readout.

“One takeaway is that companies are not passing through costs to consumers across the board just yet,” noted Chris Low at FHN Financial. “But company input costs are sharply higher, which obviously increases pressure to pass through costs in future.”

Separately, the Senate narrowly confirmed Kevin Warsh as chair of the Fed, setting up the most controversial leadership transition at the US central bank in decades and a test of its political independence.

First-quarter profits at S&P 500 companies have surged 27% so far, more than double the roughly 12% analysts had expected — the fastest year-on-year earnings growth outside of recoveries from major shocks since 2004.

The bullish run for US stocks may extend should a recovery in earnings and still-low positioning outweigh the threat from higher bond yields, said Max Kettner at HSBC Holdings Plc.

Morgan Stanley strategists are turning more positive on US equities in a bet that profits and a strong economy will keep the bull market running. The team led by Mike Wilson expects the S&P 500 to reach 8,300 in the next 12 months. The gauge is currently trading near 7,444.

“Resiliency in earnings data despite geopolitical risk, private credit concerns and AI disruption is supportive of our view,” Wilson said.