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Bond rally favours growth

Tesla, man and machine

Steady Chinese interest rates and slightly softer US data eased global interest rate fears in overnight trading. Bonds rallied, and share markets were led higher by technology stocks as investors turned to higher growth exposures. Crude oil and base metals moved higher, while currency markets remained calm.

The People’s Bank of China officials kept 1 and 5 year prime lending rates at current levels yesterday, despite the global bond market sell off that has lifted interest rates around the world. US home sales and the Chicago Federal Reserve’s activity indicator were both lower than analysts’ expectations, taking some of the heat out of the economic picture. Sales data in Japan and UK employment numbers tonight may add to enthusiasm if they fall in the “Goldilocks” range – not too hot, and not too cold.

Cryptocurrencies bucked the trend, and CMC’s All Crypto Index shed more than 7% as Bitcoin tumbled back towards US $54,000. Gold prices were stuck in the headlights, virtually unchanged, indicating movement in the US dollar is the key driver of the precious metal’s price at the moment.

Most Asia Pacific share futures followed the global leads, indicating opening gains for markets in Japan, Hong Kong, mainland China and Singapore. However Australia 200 index futures finished the overnight session down 20 points, made even more remarkable by the rally in commodity prices.

The underperformance may relate to the Australian dollar. The 25 US cent rally from the Covid lows appeared to stall just below 6 year highs against the US dollar. While sentiment remains buoyant, the technical picture for AUD/USD is deteriorating.




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