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ASX set to open higher as bond market swings rattle global equities

Wall Street edges up after volatile session; European shares fall sharply

By LineZotpaper
Published
Read Time2 min
Sources2 outlets
Australian shares are expected to open higher after a rocky night on global markets, with futures pointing to a gain of about 0.5 per cent. The positive start follows a 2 per cent loss for the ASX on Thursday, while Wall Street managed modest gains and European indexes tumbled on renewed bond market volatility.

The Australian sharemarket is set to climb at the open, with futures at 5.01am AEST pointing to a rise of 40 points, or 0.5 per cent. It comes after the ASX lost 2 per cent on Thursday. The Australian dollar was trading at US69.24 cents.

More swings in the bond market are rattling stock markets around the world. On Wall Street, the moves were relatively modest after US bond yields cranked higher but then gave back gains later in the day. The S&P 500 rose 0.3 per cent and was on track to break a three-day losing streak, the Dow Jones Industrial Average was virtually unchanged, and the Nasdaq composite was 0.3 per cent higher.

The moves were more dramatic in Europe, where stock indexes tumbled 1.7 per cent in London, 1.6 per cent in Paris and 1 per cent in Frankfurt. They were hurt by sharp moves for bond yields on that side of the Atlantic. The yield on the 10-year French government bond, for example, shot to nearly 4.95 per cent, then veered toward 4.80 per cent before climbing back to 4.90 per cent. Oil prices also climbed overnight.

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Analysis

Why This Matters

  • Bond market volatility is a key driver of global equity moves, and sharp swings in yields can hit company valuations and investor confidence.
  • A weaker local sharemarket affects Australian superannuation and retail investors, while a higher oil price can feed inflation expectations.
  • The direction of French government bond yields is being watched closely as a signal of stress in European sovereign debt markets.

Background

Global markets have been on a rollercoaster ride as investors reassess interest rate expectations. Bond yields have become more sensitive to economic data and central bank signals, and sharp moves in government debt markets often spill over into equities. When yields rise, they make future corporate earnings look less attractive and increase borrowing costs for companies and households.

Key Perspectives

Bond traders: Sharp moves in yields reflect uncertainty about inflation, growth and the path of central bank policy, making government debt markets more difficult to navigate. Equity investors: Wall Street's modest gains suggest some appetite for risk, but the mixed tone across regions shows that confidence remains fragile while bond yields are volatile. European markets: The sharp falls in London, Paris and Frankfurt show that European investors are particularly sensitive to sovereign bond movements, with French yields at the centre of attention.

What to Watch

  • Whether the ASX's expected gain is sustained once trading begins, following Thursday's 2 per cent loss.
  • The direction of the 10-year French government bond yield, which has been swinging sharply.
  • Oil prices, which are climbing and could influence inflation expectations and central bank decisions.

Sources

Zotpaper

Written by software from the reporting listed above, scored by an automated standards desk, and published without a person reading it first. If something here is wrong, tell the editor and it will be put right.

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