Markets Overview

  • ASX SPI 200 futures little changed at 8,679.00
  • S&P 500 down 0.2% to 7,400.96
  • Dow Average up 0.1% to 49,760.56
  • Aussie down 0.1% to 0.7240 per US$
  • US 10-year yield rose 4.8bps to 4.4610%
  • Australia 3-year bond yield rose 3.9 bps to 4.71%
  • Australia 10-year bond yield rose 4 bps to 5.03%
  • Gold spot down 0.4% to $4,715.17
  • Brent futures up 3.2% to $107.50/bbl

Economic Events

  • 11:00: (AU) Australia to Sell A$300 Million 4.75% 2054 Bonds on May 13
  • 11:30: (AU) 1Q Wage Price Index QoQ, est. 0.8%, prior 0.8%
  • 11:30: (AU) 1Q Wage Price Index YoY, est. 3.3%, prior 3.4%
  • 11:30: (AU) 1Q Investor Loan Value QoQ, prior 7.9%
  • 11:30: (AU) 1Q Home Loans Value QoQ, est. 0%, prior 9.5%
  • 11:30: (AU) 1Q Owner-Occupier Loan Value QoQ, prior 10.6%

Australia will overhaul tax settings that have long favored property investors and assist households and firms grappling with soaring fuel costs in a budget that outlined deficits across the forecast horizon. Commonwealth Bank of Australia is set to provide quarterly update.

Asian stocks dropped following losses on Wall Street as US inflation quickened, showing the impact of higher oil prices since the war in Iran started.

The MSCI Asia Pacific Index fell 0.4% with South Korean shares declining 2.4%. US equity-index futures also slipped after the S&P 500 Index and the Nasdaq 100 Index retreated on Tuesday, with a gauge of chipmakers slumping 3% following a record-breaking rally.

A faster-than-estimated rise in the core US consumer price index spurred an increase in Treasury yields during the US session, with traders boosting bets on a Federal Reserve interest-rate hike in 2027. Brent crude edged lower to hold at over $107 barrel on Wednesday, following three consecutive days of gains.

Elevated oil prices and mounting inflation risks are threatening to derail the blistering rebound in equities from their war-driven lows, a rally fueled by gains in semiconductor stocks and robust earnings from megacap tech companies. The surge in chipmakers has already prompted calls for a pause, as the conflict in Iran clouds the outlook for growth while adding to price pressures.

“Strong US CPI raises the possibility of a more hawkish stance from the Fed, with rising US yields seen as a headwind for equities,” said Kazunori Tatebe, chief strategist at Daiwa Asset Management. “It’s concerning that this could intensify pressure on growth stocks, such as AI and semiconductors, which have been leading the market.”

US inflation accelerated in April on rising gasoline and grocery costs, exceeding wage growth in a double-whammy for already strained consumers. The CPI rose 3.8% from a year earlier, the most since 2023. The core gauge, which excludes food and energy, increased 2.8%. A gauge of the dollar advanced for a second session on Tuesday.

Treasuries fell as rising oil prices threatened to keep inflation at levels that could prompt the Fed to raise rates next year. The US 30-year yield reached 5.02%, within two basis points of this year’s high, while two-year yields traded at about 4% during the US session.

“Inflation is roaring back — largely driven by stubbornly high oil prices — which will dominate the inflation story for the rest of the year as the conflict continues to unfold in the Middle East,” said Skyler Weinand at Regan Capital.

The flip side is that markets had already priced out rate cuts for 2026 heading into the report, said Tim Urbanowicz at Innovator ETFs from Goldman Sachs Asset Management.

As long as the 10-year Treasury yield remains contained below 4.5%, it shouldn’t be a meaningful headwind for equities, he added.

On the geopolitical front, President Donald Trump said he would prioritize trade discussions during his summit with Chinese counterpart Xi Jinping this week, and downplayed the amount of attention they would devote to the Iran war.

Traders have ramped up wagers the yuan will strengthen in coming days in a bet that the meeting will support a trade truce between the nations.

Elsewhere, UK bonds tumbled amid a political drama that’s adding pressure to a market already battered by the country’s fiscal issues. Prime Minister Keir Starmer survived in post into Tuesday evening despite a slew of ministerial resignations which have so far failed to force his downfall.