Equities_22.05.25.csv
| Name | Daily Close | Daily Change | Daily Change (%) |
|---|---|---|---|
| Dow | 41,860.44 | -816.8 | -1.91% |
| S&P 500 | 5,844.61 | -95.85 | -1.61% |
| Nasdaq | 18,872.64 | -270.07 | -1.41% |
| VIX | 20.46 | -0.41 | -1.96% |
| Gold | 3,299.00 | -14.3 | -0.41% |
| Oil | 60.36 | -1.16 | -1.79% |
US MARKET
Wall Street initially staged a cautious comeback but then late selling kicked in leaving the major indices largely unchanged. Today’s trade was in the wake of a Treasury selloff that shook markets around the globe amid fiscal concerns, but bonds gained slightly on Thursday. At the close, the S&P 500 was unchanged. The Nasdaq 100 added 0.3%. The Dow Jones Industrial Average was unchanged.
Right now, it is all about bonds. Today bond traders decided to buy the dip, allowing stocks to edge higher. Equities investors learned the hard way yesterday that the bond market has enough sway over equity pricing to disrupt even the most resolute traders. In fact, while pressures on the Treasury market eased somewhat, stocks would probably need a material move lower in bond yields to have the green light to return to recent highs. At the close, the 10-year declined 6bps to 4.55%, the 30-year declined 4bps to 5.05%.
Goldman Sachs notes that the recent move in Treasuries neared the pain threshold for the equity market. Based on their calculations, when the 10-year bond yield moves higher by two standard deviations within a one-month period, the stock market comes under pressure. At what level do yields start to put real pressure on the stock market? The easy big round number is 10-year at 5%. The more nuanced answer is above 4.7% before the end of May as velocity of move in rates matters much more than absolute levels in regards to impacting stocks.
On the economic front, Existing Homes Sales for April declined more than expected. The figure represents the slowest pace in seven months, restrained by affordability constraints and highlighting a lackluster start to the spring selling season. More significantly, it was the weakest April since 2009. Odds of a sustained pickup in the resale market are limited as mortgage rates march higher and prices stay elevated, despite more listings coming on the market. What’s more, consumer sentiment is near the lowest level on record, and the share who say now is a good time to buy a home is also close to an all-time low, according to the University of Michigan. Mortgage rates rebounded last week to a three-month high of 6.92%, and are continuing to move up even more as Treasury yields climb. It is the 30-year that sets mortgage rates – where the rubber hits the road regarding Main Street. New Home Sales out on Friday.
OVERVIEW OF AUSTRALIAN MARKET
Profit-taking in the big banks and miners dragged the sharemarket lower on Thursday, spurred by heavy selling on Wall Street that saw US equities report their steepest losses in a month. The S&P/ASX 200 Index fell 0.45% to close at 8,349 on Thursday, pulling back from a three-month high as Australian shares mirrored the sharp overnight selloff on Wall Street. Nine of 11 sectors were in negative territory, with energy leading losses. The All Ordinaries fell 0.6%.
Financial stocks led the downturn, with declines in Commonwealth Bank (-1.3%), Westpac (-0.8%), and National Australia Bank (-0.7%). Energy stocks also retreated, pressured by falling oil prices amid reports that the US and Iran will resume nuclear talks. Sector heavyweights Woodside Energy and Santos dropped 1.3% and 0.9%, respectively. Losses extended across technology, consumer, and mining stocks, reflecting broader risk-off sentiment across markets.
On the domestic economic front, private sector growth in Australia slowed to a three-month low in May, driven by a moderation in services activity, while the manufacturing sector held steady.
