Source : THE AGE NEWS
By Rita Nazareth
The Australian sharemarket is set to open higher on Friday, as global investors gear up for US jobs data that could influence the outlook for interest rates set by the Federal Reserve.
Futures were pointing to a 0.3 per cent rise in the ASX 200 on Friday morning, after the local bourse fell by 0.2 per cent on Thursday, with Star Entertainment’s share price plunging by a third as it battles to survive a cash crunch.
Futures pointed to a 0.3 per cent rise in the ASX 200 on Friday.Credit: Louise Kennerley
Overnight, the world’s biggest bond market halted a sell-off that rattled trading around the globe, with yields on US Treasuries stabilising after a rout that drove 30-year yields to the highest since 2023.
US sharemarkets were closed overnight in observance of a national day of mourning for former president Jimmy Carter.
The US dollar edged up, with the Aussie dollar fetching 61.96 US cents at 8.20am. The yield on 10-year Treasuries had changed little at 4.69 per cent. Bitcoin fell 2.5 per cent to $US92,121.89.
The key news event on the horizon for investors is US jobs data, due early on Saturday morning (AEDT).
US employers probably tempered their hiring last month to wrap up a year of moderating yet still-healthy job growth that economists expect to carry on in 2025. Payrolls increased by 165,000 in December, when the American labour market moved beyond distortions caused by hurricanes and strike activity in previous months, according to the median projection of economists surveyed by Bloomberg.
Meanwhile, the unemployment rate is forecast to hold steady at 4.2 per cent and average hourly earnings growth is likely to cool a touch from a month earlier.
“We expect the Fed would require a clear miss in key dimensions to spur a rate cut this month (payroll growth well below 100,000 and a jobless rate above 4.3 per cent) versus proceeding with the hold that is currently well priced in,” said Andrew Husby at BNP Paribas Securities.
A survey conducted by 22V Research showed most investors are watching payrolls closer than normal. Only 26 per cent of the respondents think Friday’s data will be “risk-on”, 40 per cent said “risk-off” and 34 per cent said “mixed/negligible”.
Since mid-September, the Fed has cut rates by 100 basis points. Yet the yield on 30-year Treasury bonds has risen by about the same amount. This divergence between short- and long-term rates is counterintuitive and far from isolated, with UK 30-year yields soaring even as the Bank of England eases monetary policy.
The reason: investors are worried that the inflationary pressures sparked by the pandemic will linger in the global economy for years. And what’s more, governments that spent heavily to stimulate economies during coronavirus lockdowns are still borrowing lots of money.
“The back-up in bond yields since mid-September did not surprise us,” said strategists at Yardeni Research. “But it has surprised lots of other financial pundits, who are warning that this could be bad news for stocks. It could be, especially if the 10-year US Treasury bond yield revisits last year’s high of 5 per cent. That would probably bring a buying opportunity in the bond and stock markets.”
Yardeni bets that bond yields have normalised. The 10-year yield should range between 4 per cent and 5 per cent, as it did in the years before the Great Financial Crisis, the strategists noted.
Bloomberg
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.
