What happened
Market analysis by StoneX revealed that SPI 200 futures have shown a strong +0.60 correlation with Australian three-year government bond futures over 60 sessions, far exceeding their +0.14 correlation with S&P 500 futures. Both SPI futures and three-year bond futures carved out ascending triangle technical chart patterns. Softer labor data triggered reduced RBA rate hike expectations, pushing SPI futures toward resistance.
Why it matters here
The data demonstrates that domestic interest rate expectations exert a stronger influence on Australian equity valuations than Wall Street over medium-term horizons. When bond futures rise and yields fall, valuation multiples across the ASX 200 expand. Australian investors tracking domestic stocks should monitor RBA cash rate expectations, as rate shifts drive broad index moves regardless of international market momentum.
What to watch
Australian three-year bond futures price action at technical resistance levels, alongside upcoming Australian economic data releases that influence Reserve Bank interest rate pricing.
Source
stonex.com