2023-05-08 18:05

Natasha Rudra

Australian shares are set to dip slightly as budget day rolls around with Treasurer Jim Chalmers set to reveal a $4 billion surplus but deficits still expected over the next four years.

Meanwhile traders are watching for the US Federal Reserve to offer more details on the banking system when it releases the results of its quarterly survey of senior loan officers.

The ASX-listed company Invictus Energy says it has found oil and gas in Zimbabwe. And Apple has tapped the US high-grade bond market with a $7.7 billion deal – the first in its history.

ASX futures were down 2 points to 7269 as at 3.46am.

  • On Wall St: Dow -0.2% S&P flat Nasdaq +0.1%
  • BHP +0.5% Rio +1.1% Atlassian-3.4%
  • Tesla +1.25% Apple +0.1% Amazon +0.3%

The local currency was up 0.6% to 67.90 US cents.


On, bitcoin was down 3.8% to $US27,820.

The yield on the US 10-year note was up 6 basis points to 3.50%.

On Wall Street, traders are busy parsing the outlook for the Fed ahead of a week of US data amid fears of a US recession.

John Stoltzfus, chief investment strategist at Oppenheimer: “Economic growth while slowing has not yet confirmed the arrival of a recession even as the Federal Reserve has had to raise rates fairly aggressively in an effort to bring an end to an era of ‘free money’.

Any slowing of activity in the regional banking sector with potential regulatory efforts to trim growth enough “to allow the Fed to stay light on the monetary ‘brake pedal’ going forward even as it may need to continue to raise rates for longer than many would like in order to push inflation toward its target level.”

Marko Kolanovic, JPMorgan Chase chief strategist: “US banking sector stress and a looming debt ceiling deadline elevate near-term recession risk. Absent a disruptive event, we expect a US recession dynamic will take hold gradually and won’t create space for pre-emptive Fed easing this year.”


Federal Reserve Bank of Chicago President Austan Goolsbee said a protracted showdown over the debt ceiling will make the Fed’s job much more difficult as it tries to assess the impact of bank-sector turmoil, which he said is leading to tighter credit conditions.

“This whole argument about the debt ceiling comes at the worst possible time,” Goolsbee said Monday in an interview with Yahoo! Finance, calling a potential default a self-inflicted wound. “It just makes it extremely difficult to figure out what will be the conditions for economic growth and the job market.”

Goolsbee was head of President Barack Obama’s Council of Economic Advisers during the major debt-limit impasse in 2011, when the US avoided default but saw its credit rating downgraded.

US interest-rate strategists at Goldman Sachs joined those at Barclays in advising customers to position for erosion in confidence that the Federal Reserve will cut interest rates substantially this year.

Swap contracts that reference Fed meeting dates continue to be priced for a policy rate about 70 basis points lower than the current one by year-end. Goldman strategists led by Praveen Korapaty recommended paying the December rate, anticipating it will rise.

In an encouraging signal, more companies than usual have been offering forecasts for upcoming results above Wall Street’s expectations. The ratio of such pre-announcements is at its strongest level in two years, equity strategist Savita Subramanian said in a BofA Global Research report, and analysts expect earnings growth to resume in the third quarter of this year.


Today’s agenda

Local: Federal budget; Retail sales volumes Q1

Overseas data: China export and imports; China trade balance April

Top stories

Treasurer to reveal $4b surplus but deficits still to come: The Treasurer will present the strongest budget bottom line since the Morrison government returned the budget to balance in 2018-19, thanks to a strong labour market.

PwC chief steps down over tax leaks scandal: PwC boss Tom Seymour has stepped down three days after confirming he was linked to a tax leaks scandal that had threatened the firm’s ability to win work from its largest client, the federal government.


CBA raises the white flag in the mortgage wars: Commonwealth Bank of Australia is ditching cashbacks, marking a cease fire in the mortgage wars on the eve of its trading update.

Aussie ‘unicorn’ buys German start-up Blinkist in biggest deal yet: Brisbane-based corporate training tech unicorn Go1 has closed the biggest deal in its history, to buy popular German book and podcast summary subscription service Blinkist.

Market highlights

ASX futures down 2 points to 7269 as at 3.46am AEST.

  • AUD +0.6% to 67.90 US cents.
  • On, bitcoin was down 3.8% to $US27,820.

  • On Wall St: Dow -0.2% S&P flat Nasdaq +0.1%
  • BHP +0.5% Rio +1.1% Atlassian-3.4%
  • Tesla +1.25% Apple +0.1% Amazon +0.3%
  • Stoxx 50 +0.2% FTSE +1% DAX flat CAC +0.1%
  • Spot gold +0.3 % to $US2,023.08 /oz at 1.53pm in New York
  • Brent crude +2.4% to $US77.12 a barrel
  • Iron ore $US105.10 a tonne
  • 10-year yield: US 3.50% Australia 3.39% Germany 2.32%
  • US prices as of 2pm in New York

United States


Wall Street drifted. The S&P 500 was 0.1 per cent lower in afternoon trading, coming off its worst week in nearly two months. The Dow Jones Industrial Average was down by 93 points, or 0.3 per cent, at 33,580, as of 12:57 p.m. Eastern time, while the Nasdaq composite was less than 0.1 per cent lower.

KKR & Co. earnings fell 26 per cent during the first quarter from a year earlier as a dealmaking drought continued to weigh on the alternative asset manager.

The firm reported $719.3 million in distributable earnings, or 81 cents a share, during the quarter ended March 31, according to a Monday statement. That beat the 74-cent average estimate of 15 analysts surveyed by Bloomberg.

Some small and mid-sized banks rose. PacWest Bancorp rose 2.7 per cent to recover some of its steep 43 per cent plunge last week. It said on Friday night that it’s cutting its dividend to help it build its financial strength. Western Alliance Bancorp was 1.4 per cent higher after drifting down from a bigger morning gain.

They’ve been under heavy pressure as Wall Street hunts for the next weak link following the failures of three US banks since March. Weighed down by much higher interest rates, banks are scrambling to assure Wall Street their deposits are secure and not at threat of seeing a sudden exodus, similar to the runs that toppled Silicon Valley Bank and others.



Oil advanced with a technical correction to the upside after last week’s more-than-$US5 slide, supported by supply disruptions in Canada and US jobs data.

West Texas Intermediate rose as much as 3 per cent on Monday to trade near $73 a barrel amid various supportive factors. Several oil producers in Alberta have shut in almost 150,000 barrels a day because of wildfires, while in the US better-than-expected employment data on Friday eased concerns of an economic slowdown.

“The jobs numbers are certainly helping,” said Paul Horsnell, head of commodities research at Standard Chartered Bank. “But occasionally, the answer to why the price has gone up is the simple one: that it was too low.”

European natural gas halted its decline, after trading near the lowest level since July 2021, highlighting the uncertain outlook for demand as the region fills up its inventories ahead of next winter.

Benchmark next-month futures fluctuated, after falling below €36 a megawatt-hour on Monday. Prices have more than halved since the start of this year amid stable supply, mild weather and stronger contributions to power generation from renewables.


BioNTech reported better-than-expected earnings from coronavirus vaccines as the German company looks to develop products for fighting other infectious diseases and cancer.

First-quarter sales of €1.28 billion ($US1.4 billion) exceeded the €1.1 billion average analyst estimate. Earnings per share reached €2.05, according to a statement Monday. Analysts expected 69 cents.

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