The deal is roughly the size of Atlassian’s previous 20 acquisitions combined. Cash will be used for $US880 million of the transaction, with the remainder in stock awards, the company said in a statement. The purchase is expected to be completed in the quarter ending in March 2024, and be “slightly dilutive” to operating margins through the fiscal year ending in June 2025, Atlassian said.
The local currency plunged 1.6 per cent; the Bloomberg dollar spot index leapt 0.7 per cent. The US dollar was set to post its best session in five weeks, and snap a six-day losing streak. The NZ dollar, British pound and euro also tumbled against the greenback.
On bitstamp.net, bitcoin was 0.1 per cent lower to $US26,705 at 6.58am AEDT.
The yield on the US 10-year note surged 14 basis points to 4.70 per cent at 4.59pm in New York. The two-year yield, more sensitive to rate moves, reached 5.07 per cent. The 30-year yield was at 4.85 per cent.
In a note, ANZ Research said while most US inflation data and labour market metrics are moving gradually in the right direction for the Fed,
“there will be no quick pivot in policy”.
Hurting Treasury bond sentiment this week were auctions that were met with weak demand, TD Securities said. “This afternoon’s weak 30-year auction … also showed softening end-user demand, with dealers having to take 18 per cent of the auction. While end-user takedowns at auctions have remained high in recent years, the recent drop in end-user demand is concerning as dealer capacity to backstop auctions remains lower due to limited balance sheet availability.”
TD also said it expects higher nominal and real rates to continue weighing on economic growth momentum, leading rates lower by year-end and in 2024. “In the near-term, however, worries about a lack of demand for Treasuries could allow rates to re-test recent highs, with 10’s potentially making a run at the 5 per cent mark.”
Swap contracts linked to future Fed rate decisions pushed the odds of another quarter-point hike back to about 50 per cent — from closer to 30 per cent the previous day — and expectations for the first rate cut shifted toward July from the June meeting, Bloomberg reported.
Today’s agenda
Local: BusinessNZ manufacturing PMI September at 8.30am
Overseas data: China September CPI and PPI at 12.30pm; Eurozone August industrial production; US September import and export prices, University of Michigan consumer sentiment October preliminary
Other top stories
UN warns of ‘disaster’ in Gaza as Israel strikes at Hamas Israel was pummelling the 140-square-mile Gaza Strip with airstrikes of a magnitude and intensity not seen in its past assaults.
Pubs billionaire Mathieson says margin loan is no handbrake Bruce Mathieson snr says opting out of the last Star capital raising was not influenced by a margin loan against his Endeavour stake, which has fallen in value.
Joe Aston’s farewell column After 12 years of writing Rear Window, my reward was the belly laughs I got to share with AFR readers as, again and again, we denuded the most fantastic pretenders in the nation.
Market highlights
ASX futures down 58 points or 0.8% to 7067 near 7am AEDT
- AUD -1.6% to 63.13 US cents
- Bitcoin +0.1% to $US26,716 at 7.22am AEDT
- On Wall St: Dow -0.5% S&P -0.6% Nasdaq -0.6%
- In New York: BHP -1.5% Rio -0.8% Atlassian -6.5%
- Tesla -1.6% Apple +0.5% Alphabet -1% Meta -1.1%
- Stoxx 50 -0.1% FTSE +0.3% CAC -0.4% DAX -0.2%
- Spot gold -0.3% to $US1869.50/oz at 1.35pm in New York
- Brent crude -0.1% to $US85.72 a barrel
- US oil -1% to $US82.67 a barrel
- Iron ore +2.1% to $US114.90 a tonne
- 10-year yield: US 4.70% Australia 4.37% Germany 2.78%
- US prices as of 4.59pm in New York
US CPI data parsed
Goldman Sachs: “While somewhat above our expectations, we do not expect today’s CPI report to affect the outcome of the November FOMC meeting, for which we expect unchanged policy. Recent commentary by Fed officials has also sent a strong signal that the FOMC is likely to keep the funds rate unchanged in November.”
Emin Hajiyev, senior economist at Insight Investment: “Near-term upside inflation risks cannot be ruled out. The ‘easy wins’ from base effects are now behind us … Although there may be more volatility in the upcoming CPI reports, fundamentally, the picture remains disinflationary in our view. While we cannot fully rule out one more rate hike by the end of the year, we expect the Fed will remain cautious given significant tightening of financial conditions over the last month.”
BlackRock’s Rick Rieder: “Obviously, all these #market gyrations relate to the attempts at understanding the @federalreserve policy reaction function, but we think the #Fed is likely on hold for the time being, as it awaits more data, with the possibility of a final rate hike at year end.”
Jason Furman: “2nd month in a row of elevated core inflation (3.9 per cent annual rate in Sep), following 2 good months. Last month you could tout that the 3-month annualised growth rate was 2.4 per cent and inflation was gone. Now that 3-month annualised growth rate is 3.1 per cent & a bit more reason to be cautious.”
Wells Fargo: “The downward trend in inflation remains in place in our view, with the core CPI set to recede further over the coming year as shelter disinflation resumes, supply-related pressures ease and consumers grow more price sensitive.”
Oxford Economics: “The September CPI report underlines that the path back to 2 per cent inflation will be bumpy, but underneath the ugly headline, the gradual disinflationary trend evident over the past few months still appears to be in place.”
Bank of America: “The big surprise, in our view, was shelter and owners’ equivalent rent (OER). Both advanced by 0.6 per cent m/m, an acceleration from the prior month. Rent inflation also picked up to 0.5 per cent from 0.4 per cent m/m. This acceleration in rent is worth noting since asking rent inflation, which leads the CPI measures, has moderated significantly. Therefore, we must wait for more data to see if this is just a blip or if there is something more fundamental driving the increase.”
Evercore ISI: “We continue to think there is very little likelihood of a hike in November. The report does add some risk premium to the December meeting. But we remain confident in the trend lower particularly in PCE inflation – with OER likely to moderate as a trend and some of the volatile components that were strong in September likely to come off in the months ahead.”
Pantheon Macroeconomics: “The big picture here is that core inflation continues to slow, with the y/y rate dipping to 4.1 per cent in September from 4.4 per cent in August, and the Q3 quarterly annualised gain was only 2.8 per cent. Q4 likely will see a bigger increase on this basis, thanks to the turnaround in the health insurance component and slower declines in used auto prices, but the forces are in place for core inflation to fall substantially in the first half of next year.”
Commodities
Oil pared gains after US crude stockpiles rose 10.2 million barrels, the biggest increase since February, providing a buffer against heightened geopolitical risks in Israel and Gaza.
China said that European Union plans to investigate its steelmakers over subsidies will disrupt global supply chains and fly in the face of international trade norms.
Brussels is reportedly planning anti-subsidy investigations of steelmakers producing excess in countries such as China, as part of a pact with the United States. In return, the US will not re-impose Trump-era tariffs on EU steel and aluminium.
“The Chinese side believes that the abovementioned actions of the European Union will disrupt the order of international trade,” said a spokesperson of China’s commerce ministry, He Yadong.
