Good morning. Wall Street closed out its best quarter since 2020 overnight, with the S&P 500 up 0.8 per cent to 7,499 and the Nasdaq up 1.5 per cent to 26,214 as Apple and five other members of the Magnificent Seven advanced into quarter-end. The gains came despite a hawkish turn from the Federal Reserve. The US 10-year Treasury yield rose 5 basis points to 4.42 per cent and the 2-year 3 basis points to 4.10 per cent, with futures still pricing the risk of a rate rise after Cleveland Fed president Beth Hammack said demand for artificial-intelligence infrastructure is fuelling inflation and may require higher rates.
Commodities and currencies were more mixed. Gold settled flat at US$4,022 an ounce, on course for its worst quarter in more than a decade as the prospect of higher rates ends its record run, while copper rose 2.5 per cent to US$13,772 a tonne. The US dollar index firmed 0.1 per cent to 101.16 and the yen slid to 162.57 per dollar, near its weakest in several decades. Brent crude steadied at US$73.37 a barrel and bitcoin fell 2.7 per cent to US$58,510.
Locally, the ASX 200 closed the prior session up 0.7 per cent at 8,823 and futures point to a higher open. The Australian dollar rose 0.5 per cent to US69.19 cents after the Reserve Bank's June board minutes struck a hawkish tone, with the cash rate held at 4.35 per cent and the board flagging the risk of rising inflation expectations. House-price declines in Sydney and Melbourne deepened, and the federal government moved to give ASIC the power to police and fine accounting, audit and consulting firms for the first time.
The Australian dollar rose 0.5 per cent to US69.19 cents and the 10-year ACGB yield eased 1 basis point to 4.77 per cent, with the board flagging the risk of rising inflation expectations.
The Australian Financial Review reported the upper end of the Sydney market is falling fastest and that Perth, Brisbane and Adelaide are also easing, with Treasury forecasts pointing to falls of more than $100,000 in some cities.
The plan would give ASIC the power to police and fine the firms for the first time, part of a wider response to the KPMG scandal.
The US 10-year Treasury yield rose 5 basis points to 4.42 per cent, down 9 basis points over five sessions but up 19 basis points over 12 months, and the 2-year rose 3 basis points to 4.10 per cent, after Cleveland's Beth Hammack said AI-driven demand may require higher rates.
Job openings were steady at 7.6 million in May with a 3.3 per cent hiring rate, and Conference Board confidence rose to 91.2 in June from 90.6 but missed the 94.2 expected; Case-Shiller home prices rose 0.8 per cent over the year to April.
Bullion settled at US$4,022 an ounce, flat on the day and down 2.6 per cent over five sessions but up 22.1 per cent over 12 months, set for a monthly loss of about 11 per cent; copper diverged, rising 2.5 per cent to US$13,772 a tonne.
The Australian Financial Review reported the growth is being driven by younger Australians and rising female participation in the retail trading base.
Copper is up 24.2 per cent over the past 12 months, while iron ore held at US$100.26 a tonne, down 0.1 per cent on the day.
Bullion is down 2.6 per cent over five sessions and up 22.1 per cent over 12 months, a read-through for ASX producers Northern Star and Evolution Mining.
Brent is down 4.8 per cent over five sessions, leaving ASX energy majors Woodside and Santos exposed to the softer oil price.
The S&P 500 rose 0.8 per cent to 7,499 and the Nasdaq 1.5 per cent to 26,214, recovering after a volatile June for the AI-spending leaders.
The Financial Times reported the exit as the latest management upheaval at the oil major.
The clearance is a regulatory win for the company's push into smoke-free products.
Analysts are weighing potential merger and acquisition targets, with the split leaving Comcast focused on broadband, wireless and technology.
“When I look at policy, if that continues, it may mean that we need higher interest rates to bring inflation back down to target.”
“We have time to judge the pass-through of higher energy prices, and financial conditions have already tightened.”
“The government will give ASIC the power to police and fine accounting, audit and consulting firms for the first time.”
“Kill switches could be needed for AI-powered trading, which could make markets more volatile through herding behaviour.”
“Europe's rearmament drive is sustaining 195,000 US defence jobs, which is the economic case for staying committed to the alliance.”
“It's both a valuation catch-up story and a fundamental story as the AI trade broadens out beyond the megacaps.”
For wholesale clients only. Prepared by Arc Point OCIO Pty Ltd (ACN 693 569 765), Corporate Authorised Representative (CAR 1319046) of Capella Advisory (AFSL 550125), for wholesale clients within the meaning of the Corporations Act 2001 (Cth); it is not intended for, and should not be relied on by, retail clients. This note is factual market reporting and general information, with any arcpoint view clearly labelled as such. It is not personal advice and does not take into account any person's objectives, financial situation or needs. Information is drawn from sources believed to be reliable but its accuracy and completeness are not guaranteed. Past performance is not a reliable indicator of future performance.
Sources: Yahoo Finance, FRED, RBA, company filings.