ASX 200 Set for 57-Point Slide as Treasury Yields Hit 5%
Australian equities face a 0.7% drop at the open after US 10-year yields reached 5% and oil prices stayed above $100.
Key points
- S&P/ASX 200 is set to drop 57 points or 0.7% to near 8,674 at Monday's open.
- US 10-year Treasury yield rose to 5%, with the two-year yield hitting 4.741%.
- Brent crude oil settled at US$103.87, remaining well above its early-July level of US$72.
The S&P/ASX 200 is projected to fall 57 points or 0.7% at Monday’s open. This move would place the index near 8,674, close to its three-month low. Rising global bond yields are the primary driver of this expected weakness.
Wall Street ended mixed Friday as the US 10-year Treasury yield rose to 5%. The S&P 500 gained 0.2% to 7,650.50 while the Dow Jones fell 0.2%. The Australian dollar traded at US71.11 cents during the weekend session.
US yields pressure global equity sentiment
The two-year Treasury yield reached 4.741%, the highest since July 2024. Markets are pricing in one or two more Federal Reserve rate hikes before year-end. This expectation of tighter monetary policy is weighing on valuations across sectors.
European markets finished sharply lower as bond yields remained elevated. The FTSE 100 dropped 1.5% to 10,659.13 while the DAX declined 1.6% to 25,304.06. Investors are reacting to the persistent cost of capital in major economies.
Energy prices stay above key thresholds
Brent crude settled at US$103.87, down 0.9% for the session. West Texas Intermediate fell 1.6% to US$100.30 as supply optimism grew. These levels remain significantly above the US$72 price seen in early July.
Elevated fuel costs continue to complicate the inflation outlook for households. This pressure is expected to affect consumer spending in the coming months. Energy producers on the ASX may face headwinds from these price dynamics.
Crypto stocks rebound after weekly losses
Coinbase Global gained 11.66% and Robinhood Markets climbed 9.12% on Friday. These companies rebounded from sharp losses earlier in the week. Bitcoin traded near US$80,300 during the weekend despite legislative setbacks.
The US Senate failed to advance cryptocurrency market-structure legislation earlier in the week. This political uncertainty continues to create volatility in digital asset markets. Investors are closely watching regulatory developments for future price direction.
