Markets Overview

  • ASX SPI 200 futures down 0.7% to 8,909.00
  • S&P 500 down 1.2% to 7,420.10
  • Dow Average down 1.0% to 51,492.55
  • Aussie down 0.8% to 0.7014 per US$
  • US 10-year yield rose 4.6bps to 4.4849%
  • Australia 3-year bond yield fell 4.3 bps to 4.38%
  • Australia 10-year bond yield fell 5.9 bps to 4.77%
  • Gold spot down 1.7% to $4,257.54
  • Brent futures down 0.5% to $78.60/bbl

Economic Events

  • 10:30: (AU) Australia to Sell A$1 Billion 127-Day Bills on June 18
  • 10:30: (AU) Australia to Sell A$1 Billion 84-Day Bills on June 18
  • 11:00: (AU) Australia to Sell A$150 Million 2% 2035 Linkers on June 18

Australia’s corporate watchdog is investigating a number of private credit funds and warning industry managers to make sure that asset valuations are “grounded in realistic assumptions” before an end-of-month reporting deadline.

Asian stocks and bonds looked set to track US losses after the Federal Reserve signaled rates may need to rise further to contain inflation.

Equity-index futures for Japan, South Korea and Australia pointed to lower opens after the S&P 500 fell 1.2% and the Nasdaq 100 dropped 1%. US stock futures edged higher in early Asian trading, offering a measure of relief after Wednesday’s selloff. US crude oil prices declined more than 1%. The yen weakened to its lowest level against the greenback since July 2024, increasing the risk of official intervention.

Australian short-end bond yields rose five basis points early Thursday after two-year Treasury yields, which are highly sensitive to Fed policy expectations, jumped 13 basis points to 4.18%. Roughly half of Fed policymakers projected rate hikes this year, prompting traders to fully price in an increase by October and see a strong chance of a move as soon as September.

Fed Chair Kevin Warsh, in his first press conference as head of the central bank, declined to offer guidance on the next policy move. He emphasized that inflation has remained above the Fed’s 2% target for several years and reiterated the central bank’s commitment to restoring price stability.

“Half the committee is expecting rate hikes this year, which is a real shot across the bow at the market,” said Bob Michele, chief investment officer and global head of fixed income at JPMorgan Asset Management. “I think they’re getting ready for rate hikes.”

On the geopolitical front, President Donald Trump said he has signed the US-Iran deal. Attention will now turn to the shipping companies that had largely stopped sending their vessels through the Strait of Hormuz because of blockades by both the US and Iran. Trump had said earlier the deal would be signed on June 19 to allow for any mines in the strait to be cleared away.

Investors are already looking beyond the conflict, according to Morgan Stanley strategist Mike Wilson, even as the proposed agreement leaves many of the most difficult issues unresolved.

“The market’s moved past the war,” Wilson said, pointing to oil prices that never rose past peaks set during the onset of Russia’s conflict with Ukraine. “We just learned how much supply is out there,” he said.

The Fed decision marked the fourth consecutive meeting in which policymakers left rates unchanged. Officials described economic growth as “solid” and highlighted strong productivity gains and capital investment, while making clear that inflation has become a greater concern than labor-market weakness.

“The Fed’s recent hawkish shift was not just about higher energy prices,” said Kay Haigh at Goldman Sachs Asset Management. “Despite the recent pullback in oil, half of the members of the FOMC expect rate hikes as soon as this year, reflecting strong labor market and inflation data.”

Warsh also announced the creation of a task force to review the Fed’s $6.7 trillion balance sheet, an issue he has long criticized. The group would examine whether “monetary policy is coming from our interest rate tool or our balance sheet tool,” he said.

Investors in Asia will also be watching technology stocks after a mixed session for US peers. Broadcom Inc., Micron Technology Inc. and Applied Materials Inc. were among the biggest contributors to gains in the S&P 500, helping lift the Philadelphia Semiconductor Index 1.4%. At the same time, all members of Bloomberg’s Magnificent Seven Index fell at least 1%, dragging the megacap gauge down 2.8%. SpaceX shares dropped 4.9%, snapping a rally that had lifted the stock roughly 50% since its public listing through Tuesday’s close.

In Japan, investors remained concerned the central bank was not tightening policy quickly enough to contain inflation and stabilize the yen, even after it raised its benchmark rate to the highest level since 1995 earlier this week. Deputy Governor Shinichi Uchida said the exchange rate is important to the economic outlook but is not a direct policy target.