United States
Wall Street ended the week on a strong note, with major indices climbing and the S&P 500 closing at a record high as investors embraced risk assets following news of a US-China trade agreement. However, markets pulled back slightly from session highs after President Trump announced the termination of trade talks with Canada.
The S&P 500 gained 32 points, or 0.52%, to close at a record 6,173, with nine of eleven sectors finishing in the green. The Dow Jones Industrial Average rose 1% to 43,819, while the Nasdaq Composite also set a new all-time high, climbing 105 points to 20,273.
On the economic front, Core PCE (Personal Consumption Expenditures) – the Federal Reserve’s preferred inflation gauge – rose 0.2% in May and 2.7% year-on-year. The report also showed that consumer spending, which represents two-thirds of US economic activity, declined by 0.1% in May following a 0.2% increase in April. Market expectations for monetary policy are mixed, as Fed Chair Jerome Powell reiterated during the week that the central bank is taking a “wait and see” approach in response to tariffs and broader economic conditions whilst other commentary call for cuts.
US Personal Consumption Expenditure (PCE) Core Price Index YOY
Attention now turns to employment data later this week, which will be closely watched for signs of labour market strength. The June non-farm payrolls report is scheduled for release on Thursday due to US markets being closed on Friday for Independence Day.
Bond yields edged higher, with the US 10-year Treasury yield up 4 basis points to 4.28%, and the 2-year yield rising by 3 to 3.75%.
In company news, Nvidia extended its remarkable rally, closing 1.76% higher at $157.75 and gaining 9.3% for the week. The surge pushed Nvidia back to the top spot as the world’s most valuable company, overtaking Microsoft. Alphabet (Google) also advanced, up 2.20% to $178.27. Retail suppliers Amazon and Walmart were both higher as US health officials met to discuss ways to get drugs direct to patients from manufacturers. Amazon share added 2.85% and Walmart was higher by 1.30%.
Trade developments will remain in focus during this holiday-shortened week. US Commerce Secretary Lutnick indicated that up to 10 bilateral trade agreements could be signed soon, as the 90-day trade negotiation window is set to expire on July 9. However, most analysts expect the deadline will be extended. A large sway of various employment data will also be a key driver of sentiment in the coming days.
Europe
European stocks finished the week in positive territory, with the Euro Stoxx 600 rising 1.14% to close at 543.63, marking its first weekly gain in three weeks. Investor sentiment was buoyed by the announcement of a US-China trade agreement and comments from European Commission President Ursula von der Leyen, who expressed optimism that a US-EU trade deal could be reached before the current deadline expires.
In the UK, the FTSE 100 gained 0.72% to close at 8,798. The UK midcap index also advanced, reaching a 10-month high as investors turned their attention to domestically focused companies.
Ten of the eleven sectors on the Euro Stoxx 600 ended higher, led by consumer discretionary and industrials. The consumer discretionary sector saw strong gains, driven by exposure to the Chinese market amid trade deal optimism. Among the top performers, Mercedes rose 4.85%, BMW added 5.32%, and Porsche surged 7.61% after announcing plans to divest its consulting and IT services division, which could be valued at up to €1 billion. The luxury goods sector index climbed 2.58% for the day.
On the macroeconomic front, European Central Bank (ECB) officials reaffirmed their view that inflation across the eurozone remains on track to reach the 2% target, despite slightly higher-than-expected inflation prints from France and Spain. The increase in France was attributed to services inflation, while in Spain it was driven by rising food prices.
German 10-year bund yields edged up by 2 basis points to 2.59%, while the euro strengthened to USD 1.1718— closing at its highest level in four years. The euro advanced 2% over the week against the US dollar.
Australia
The Australian equity market retreated from early gains on Friday, closing 36 points lower, down 0.43% at 8,514.20. Strength in the materials sector was outweighed by declines in financials and healthcare, with only three sectors finishing higher while eight ended in the red. Losses in the ASX 200 price index were further exacerbated by a large number of real estate stocks trading ex-dividend.
Materials outperformed, driven by strength in iron ore stocks following reports of low steel inventories in China and news of a US-China trade agreement. The deal reportedly includes a clause affirming China’s commitment to the supply of rare earths. Rio Tinto led the gains among major miners, rising 4.59% to $108.97, while BHP added 3.90% to close at $37.53. In contrast, Lynas Rare Earths fell 3.48% to $8.86 on the trade deal news.
The financials sector declined 1.51% amid profit-taking, following a solid performance earlier in the week. All four major banks posted meaningful losses, with Commonwealth Bank the worst performer, dropping 2.81% to $185.36. Macquarie Group bucked the trend, gaining 1.96% to finish at $220.20.
Healthcare fell 1.41%, led by CSL, which dropped 2.35% after reports that the revamped US vaccine advisory committee may revise its approval guidelines. Meanwhile, Neuren Pharmaceuticals continued its rally following FDA approval earlier in the week, rising another 6.69% to $14.20 and up 13% for the week.
In company-specific news, Reece Plumbing plunged 18.66% after issuing a profit warning, cutting its guidance by nearly 20% to $550 million. The company cited increased competition in the US and stagnant housing activity in Australia as key factors impacting demand for its products.
Bond yields saw only marginal movement, while the Australian dollar strengthened, reaching a six-month high above 0.6550 during the Sydney session. It later eased in offshore trading to start the week at 0.6529. ASX 200 futures closed slightly higher, gaining 5 points or 0.06%.
Commodities
Iron ore extended its recent rebound, supported by positive sentiment surrounding the US-China trade deal, closing 1% higher in New York at US$94.45 per tonne. A recovery in Chinese finished steel production also contributed to increased demand. Investors are now closely watching China’s upcoming Purchasing Managers’ Index (PMI) data, due today, for further insight into the country’s industrial demand and its implications for iron ore.
Copper eased slightly, falling US$22 (or 0.20%) to close at US$9,878 per tonne on the London Metal Exchange (LME).
Oil prices were steady to slightly higher as markets wrapped up a volatile two-week period. West Texas Intermediate (WTI) rose 0.43%, or US$0.28, to close at US$65.52 per barrel, while Brent Crude remained flat at US$67.77. Reports that OPEC+ members are considering additional output increases for August—like those implemented in July—put some pressure on prices. However, this was offset by growing optimism that global economic growth may hold up better than expected as US trade policy becomes clearer.
Gold declined as investors shifted toward risk assets, falling US$53.59 (or 1.61%) to settle at US$3,274 per ounce. Lower geopolitical tensions and improved market sentiment triggered profit-taking, with gold now down 3.35% from its mid-June highs. Silver also pulled back, closing at US$35.99.
Bitcoin trading remained subdued over the weekend, hovering in a tight range since Thursday’s close. The cryptocurrency ended the weekend at US$107,471, down 0.31%.
Economic Calendar
AU:
- Melbourne Institute Inflation Gauge (Jun) – 11.00am
China:
- Purchasing Manager Indexes – Manufacturing/Non-Manufacturing (Jun) – 11:30am
US:
- Chicago PMI (Jun) – 11:45pm
- Dallas Fed Manufacturing Index (Jun) -12:30am
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
