United States
US markets were mixed in trade on Thursday. The Dow Jones gained 161.35 points, rising 0.37% to close at 43,223.90. The Nasdaq Composite edged up 0.04%, adding 6.53 points to finish at 18,373.61, while the S&P 500 remained mostly unchanged, slipping by 0.02% or 1 point to end at 5,841.47. Five of the 11 sectors on the S&P 500 closed higher, with utilities and real estate underperforming.
Early gains in chip stocks reversed later in the session. Taiwan Semiconductor saw a sharp increase of 10.5% in US trading after reporting a 54% surge in profits, driven by its supply of AI-related chips to major US tech companies. Nvidia initially jumped 3.7% on the news but pared gains, closing with a gain of 0.89% at $136.93. Other tech stocks remained relatively flat, with Meta rising slightly to $576.93, up 0.14%, following reports of layoffs in WhatsApp and Instagram teams. Alphabet was the worst performer in the sector, dropping 1.34% to $164.51 after announcing the consolidation of several teams into its DeepMind research lab to focus on AI opportunities.
Regional banks continued their positive momentum as more companies reported upbeat earnings. Asset manager Blackstone surged 6.27% to $169.73 on strong revenue and inflows, continuing a trend seen across the sector globally. Insurer Travelers soared 9% to close at $264.82 after tripling its profits, driven by record underwriting premiums and better-than-expected investment returns. The CEO expressed confidence in the company’s outlook for 2025. Netflix rose by 4.57% during the session as traders anticipated earnings, though shares fell by 2% in after-hours trading due to disappointing subscriber growth.
US bond yields climbed as economic data largely met expectations, supporting the growth narrative. Industrial production fell by 0.3% in September, while capacity utilization dipped slightly to 77.5%, down from 78%. Retail sales were robust, increasing by 0.4% month-on-month. Traders steepened the yield curve, with the 2-year note up 3.5 basis points to 3.97%, the 10-year rising 7.5 basis points to 4.09%, and the 30-year bond gaining 9 basis points to 4.39%. The US dollar strengthened further, with the index rising to 103.79, a gain of 0.20%. Against the yen, the USD traded at 150.23.
Europe
European stocks closed higher after the European Central Bank (ECB) cut interest rates by 25 basis points to 3.25%. ECB President Christine Lagarde stated that the bank remains confident that the disinflationary trend is on track, and recent data supports a continued decline in inflation. The Euro Stoxx 600 rose by 0.83%, gaining 4.31 points to finish at 523.91. Out of 11 sectors, 8 ended the day higher, with industrials and consumer staples leading the gains. In contrast, the real estate sector lagged due to the ECB providing no forward guidance on the pace of future rate changes. Money markets are currently forecasting three more rate cuts by March 2025.
Germany’s DAX index rose by 150.58 points, up 0.77%, closing at a record high of 19,583.39. France’s CAC 40 posted an impressive gain of 1.22%, adding 91.73 points to finish at 7,583.73. In the UK, the FTSE 100 climbed 56 points, or 0.67%, to close at 8,385.13, as traders grew increasingly confident that interest rates would be lowered at the next Bank of England (BOE) meeting.
In stock-specific news, the banking sector continued to perform well. Finnish bank Nordea surged by 6.3% after announcing stronger-than-expected profits and a stock buyback program. In the UK, NatWest gained 2.2%. Meanwhile, food giant Nestlé cut its full-year guidance on Thursday, but its shares rallied by 2.4% as the new CEO indicated a review of the company’s product portfolio, hinting at potential asset disposals to streamline the business.
The FTSE’s gold sub-index saw a robust 1.71% gain, with gold prices reaching new highs. Rentokil advanced by 8.8% after reporting better-than-expected results in North America and continuing its cost-cutting initiatives.
On the economic front, ECB inflation data showed a drop to 1.7% in September, down from 2.2% in August. German bund yields fell at the short end, with the two-year bond down 2.5 basis points to 2.14%. However, the 10-year yield rose by 2.5 basis points to 2.21%, causing the yield curve to steepen. The UK saw similar trends, with the two-year gilt rising by 0.5 basis points to 4.02%, and the 10-year yield increasing by 2.5 basis points to 4.085%. The EUR/USD pair declined by 0.33% to trade at 1.0826.
Australia
The Australian share market is expected to open lower with the ASX200 futures pointing to a 33 point drop the equivalent of 0.38%. The AUDUSD moved higher to be at 0.6696. BHP is trading in NY at $42.55 a drop of 1.25%.
The Australian share market rallied on Thursday, taking its lead from the overnight gains in the US. The ASX 200 rose by 71.2 points, or 0.86%, to close at a record high. Nine out of the eleven sectors finished higher, with Financials and Industrials leading, while Technology was the weakest performer.
In the Financial sector, the bank sub-index performed the best. All the Big Four banks saw gains of over 1%, with Westpac leading, rising by 2.55% to close at $32.55, an increase of 81 cents. Commonwealth Bank of Australia (CBA) followed with a 1.57% rise, adding $2.20 to close at $142.00. AMP surged by 17.71%, closing at $1.595, a rise of 24 cents, as the company joined other fund managers in reporting significant net cash inflows. AMP’s third-quarter inflows for its platforms reached $750 million, up 76% year-over-year, while assets under management increased by 0.4% for the quarter, reaching $23 billion. The company is now on track for a better-than-expected profit.
In the Industrials sector, Brambles saw a strong recovery, gaining 3.19% to close at $19.14, a rise of 60 cents. Qantas followed global peers, rising by 2.28%, or 17 cents, to close at $7.62. Auckland Airport gained 2.54% to $6.87 after reaffirming its guidance at its AGM and receiving broker upgrades.
On the other hand, the Technology sector underperformed, with Wisetech falling by $3.88, or 2.96%, to $127 on higher-than-normal trading volume, leaving the shares at a five-week low.
The Materials sector also weakened, as iron ore prices fell by 2.7% to US$102 by the close of Australian equity trading. A news conference by the Chinese Housing Minister outlined plans to clear the backlog of existing properties rather than commence new projects, which affected steel and iron ore prices. Fortescue fell by 2.74%, or 56 cents, to $19.91. Andrew and Nicola Forrest announced their resignation as co-chairs of their charity, Minderoo, with Mr. Forrest stating his intention to focus more on decarbonizing Fortescue’s operations. BHP also declined, falling by 1.26% to $42.99, a drop of 55 cents.
Uranium miners, however, performed well, with Boss Energy jumping 6.73% to $3.65, a rise of 23 cents. Silex Systems surged 13.63%, gaining 62 cents to close at $5.17, as buyers were encouraged by Amazon’s announcement to invest in small modular nuclear reactors in partnership with US companies.
Employment figures released today showed a gain of 64,100 jobs, significantly higher than the expected 25,000. Most of the new jobs were full-time, and the participation rate increased to 67.2%. The unemployment rate stood at 4.1%. These strong figures indicate resilience in the economy and have delayed expectations of an interest rate cut. The two-year bond yield rose by 5.5 basis points to 3.855%, while the 10-year bond yield increased by 4.5 basis points to 4.245%. The March bank bill futures also saw an increase in yield, rising by 6 basis points to 4.14%, as traders reduced the likelihood of a February rate cut.
Commodities
Gold shone as it reached a record high in overnight trading, climbing to US$2,691.21, a gain of US$17.35, or 0.65%. This rise was largely driven by traders’ uncertainty as the US presidential election comes into focus, alongside expectations of lower global interest rates. Ongoing concerns about US debt levels and the continued supply of US bonds were also highlighted by analysts in reports today. Gold has gained more than 30% in value this year. Meanwhile, silver remained unchanged at US$31.70. Bitcoin, however, lost some momentum, dropping by US$702, or 1%, to trade at US$66,918.
Oil prices edged higher, with West Texas Intermediate (WTI) crude rising by 0.44%, adding 30 cents to close at US$70.69. Brent crude also gained, increasing by 25 cents, or 0.34%, to settle at US$74.47. US oil inventory levels were down by 2.2 million barrels for the week, contrary to analysts’ expectations of a rise.
Iron ore prices plummeted during Asian trading on Thursday following a disappointing update from China’s Housing Ministry. The report outlined plans to complete ongoing construction projects and stabilize property prices but did not include any new plans for additional dwellings, dampening demand for steel and, consequently, iron ore. The November futures contract in Singapore fell by 4.9%, or US$5.12, to close at US$99.62. However, in US trading, iron ore recovered slightly, gaining 1.1% to finish at US$100.80 by the close of New York trade. Copper also saw a decline, dropping by US$42 to end the day at US$9,516 per tonne.
Economic Calendar
China:
- GDP (Sep) – 1:00pm
- Industrial production (Sep) -1.00pm
- Unemployment (Sep) -1:00pm
US:
- Housing Starts and Permits (Sep) – 11:30 PM
- JOLTS Job Openings (July) – 12:00 AM
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
