ASX Rebounds from Three-Month Lows Amid Global Bond Stress

The ASX 200 indicator is up 14.3 points, or 0.16%, at 8,686.3 ahead of the cash market open. This marks a cautious rebound from an overnight low of 8,596.6. The index had closed at an 11-week low of 8,672.50 on Tuesday. The recovery follows a 0.9% decline that left the benchmark at its lowest level in almost three months.

Global sentiment is weighed down by rising government bond yields. The US 10-year Treasury yield closed near 5.0%, its highest level since 2007. Australian bond yields also spiked, with the 10-year yield rising 8 basis points to 5.42%. Market participants are pricing in a 70% probability of a Reserve Bank of Australia rate increase in September.

US Bond Yields Reach Decade Highs

The US 10-year Treasury yield touched 5.04% before settling around 5.0%. This level exceeds the peak recorded in 2007. Elevated oil prices and persistent inflation concerns drive the rise. Weak demand for 20-year Treasuries added further selling pressure. The Wall Street Journal reported that government borrowing uncertainty contributes to the stress.

Australian fixed income markets mirrored the global trend. The three-year yield climbed 9 basis points to 5.05%. The 10-year yield increased 8 basis points to 5.42%. Westpac’s September 16 morning report notes that markets expect two rate hikes through 2027. This outlook reflects a tightening monetary policy environment in both major economies.

Bitcoin Drops After Senate Block

Bitcoin fell 4.2% to approximately US$75,920. The US Senate blocked legislation intended to create a regulatory framework for digital assets. The proposal faced demands for tighter restrictions on President Donald Trump’s cryptocurrency investments. Coinbase Global shares dropped 10.1% in the wake of the legislative failure.

Robinhood Markets declined 3.4% as crypto sentiment soured. The broader digital asset sector faced pressure from the regulatory uncertainty. This retreat contrasts with the stabilization seen in some technology stocks. Nvidia gained 0.6% after a previous day’s 3.4% drop. Advanced Micro Devices climbed 2.2% as chipmakers found support.

Global Equity Markets Remain Weak

US equity indices closed lower on Tuesday. The Dow Jones Industrial Average fell 328.09 points, or 0.6%, to 52,093.11. The S&P 500 dropped 0.4% to 7,585.73. The Nasdaq Composite lost 0.8% to 25,981.57. Consumer-facing companies led the losses, with Chipotle Mexican Grill down 5.9%.

European markets also declined as energy costs rose. The Euro Stoxx 50 fell 0.4% to 6,237. The FTSE 100 dropped 0.4% to 10,658. Asian markets remained under pressure, with the Hang Seng index falling 1% to 24,667. This move reversed the previous session’s gains. Chinese shares declined for a fourth consecutive day.

Sector performance on the ASX was mixed. Materials and financial stocks dragged the index lower on Tuesday. BHP, Rio Tinto, and Fortescue all declined. Commonwealth Bank recorded the largest fall among major banks. Healthcare stocks provided support, with CSL and ResMed advancing. Zip initiated a $50 million share buyback, supporting its share price.