Markets Overview
- ASX SPI 200 futures up 1.7% to 8,793.00
- S&P 500 up 1.8% to 7,394.30
- Dow Average up 1.9% to 50,848.75
- Aussie up 0.8% to 0.7052 per US$
- US 10-year yield fell 9.1bps to 4.4611%
- Australia 3-year bond yield fell 1.2 bps to 4.50%
- Australia 10-year bond yield rose 0.5 bps to 4.90%
- Gold spot up 3.4% to $4,211.04
- Brent futures down 4.2% to $89.16/bbl
Economic Events
For decades, building a high-speed rail network in Australia has been derided as a financially flawed fantasy, even as Sydney’s population strains at the seams and housing prices soar. The affordability crisis is now spurring the government to bet on a A$94 billion fix.
Stocks in Asia were set to advance Friday, tracking a rally on Wall Street after President Donald Trump said the US was nearing an agreement with Iran, raising hopes for a diplomatic end to a conflict that has rattled global markets.
Equity-index futures for Japan, Australia and Hong Kong pointed to gains at the open. Contracts on US stocks edged higher after the S&P 500 rose 1.8% and the Nasdaq 100 jumped 3.3% on Thursday. The Philadelphia Semiconductor Index surged nearly 8%, leading a broad risk-on move across technology shares. SpaceX raised $75 billion, making history with the biggest-ever IPO.
West Texas Intermediate crude fell 2% in early trading after Brent oil slid over 4% on Thursday as Trump pulled back threatened military attacks against Iran, citing “discussions” that “have been brought to the highest level of Iranian leadership” for a negotiated end to the war. He said a signing could take place as soon as this weekend in Europe with Vice President JD Vance in attendance.
Treasuries rallied on Thursday, sending yields lower across the board, as oil dropped. The dollar also weakened broadly.
The latest push for a deal has buoyed risk sentiment by raising hopes that a widening Middle East conflict can be avoided and attention shifted back to strong earnings and the AI-driven rally. Investors see a de-escalation as removing a major source of uncertainty for markets and reducing the threat of energy-supply disruptions that have driven volatility in oil.
“While the path toward a resolution is likely to be uneven, our base case is that diplomacy ultimately prevails, allowing investors to refocus on resilient economic fundamentals and robust earnings growth,” said Ulrike Hoffmann-Burchardi at UBS Chief Investment Office.
Trump’s pullback of threatened military strikes against Iran was a stark reversal that came just hours after he vowed to hit the Islamic Republic “VERY HARD” and threatened to seize its oil infrastructure.
Asked whether Iran’s supreme leader had agreed to a deal, Trump said, “I understand the answer is yes.” The country’s semi-official news agency Fars, however, said earlier Thursday that officials had not yet approved the text of any agreement with the US, citing an unnamed source.
Traders are getting excited about a canceled airstrike, and now a “great settlement,” but it is not yet a signed treaty, wrote Dave Mazza, chief executive officer of Roundhill Financial. “There’s material upside left if a deal is actually signed because oil and volatility are still pricing meaningful conflict risk. If it doesn’t, today’s gains were borrowed, and the market will want them back with interest since we’ve seen this before.”
Trump’s comments lowered yields across maturities by eight to 11 basis points on Thursday, to the lowest levels of the week, and weighed on the dollar. Short-term interest-rate contracts that reflect expectations for the Fed — and had fully priced in a quarter-point increase in the US policy rate by December — shifted the assessment to the first quarter of 2027.
The oil-driven moves in bonds were complicated by the release of US inflation data showing bigger increases in wholesale prices in May than economists had estimated. Core prices excluding energy and food rose less than estimated, however.
“Many are telling us they think the worst of the inflation data is in,” said Tony Farren, managing director in rates sales and trading at Mischler Financial Group. Lower-than-expected increases in core inflation despite higher energy prices “has changed the mindset of the Treasury market at least temporarily.”
