United States
US equities extended their impressive rally overnight, with the S&P 500 posting its 10th record close in just 19 sessions. The index inched up 0.1%, buoyed once again by optimism surrounding artificial intelligence, while the Nasdaq Composite added 0.2%. The gains were underpinned by strength in megacap tech, led by Alphabet and Nvidia. The Dow Jones Industrial Average, however, fell 0.7% as weakness in key industrial and healthcare names weighed heavily.
Alphabet helped power sentiment after announcing a billion-dollar cloud deal with ServiceNow and delivering quarterly results that affirmed the payoff from its massive AI investments. Nvidia rose to yet another record high, and Amazon also firmed, reflecting the ongoing rotation into technology leaders. However, not all tech names fared well — Tesla tumbled 8.2% after CEO Elon Musk signalled a difficult path ahead, citing economic headwinds and operating challenges.
While AI optimism has supported the index-level performance, broader market indicators painted a more mixed picture. The small-cap Russell 2000 Index dropped 1.4%, reflecting reduced risk appetite for non-megacap names. Margin debt — a gauge of investor leverage — is rising rapidly, with some analysts warning of overheating. Trading desks at Goldman Sachs and Citadel Securities are reportedly encouraging clients to explore cost-effective hedges amid growing complacency.
US Treasury yields rose for the second day in a row, with the benchmark 10-year yield up three basis points to 4.41%. Strong labour market data added to the cautious sentiment on interest rates. Jobless claims declined for a sixth straight week — the longest such streak since 2022 — reinforcing the view that the Fed may have little reason to rush into cutting rates. Markets are now pricing in fewer than two rate cuts for the remainder of the year.
Europe
European shares edged higher, with the Stoxx Europe 600 closing up 0.2%, marking its second straight gain. Investors responded positively to a wave of better-than-expected earnings and signs that the US and EU may be nearing a breakthrough in contentious trade talks. The telecom sector led gains, driven by a 10% surge in BT Group shares following strong results.
Banking heavyweight Deutsche Bank soared 9.1% after delivering a robust earnings beat, lifting broader sentiment in financials. On the downside, Nestle fell 4.6% as weak performance in China and its health science unit disappointed investors. French appliance maker SEB dropped 9.8% after slashing its outlook, while luxury titan LVMH posted softer sales as consumer demand for high-end goods continued to wane.
The European Central Bank left rates unchanged as expected, with inflation stabilising near its 2% target. Trade developments remained front of mind, with Bloomberg reporting progress on a deal that would impose reciprocal 15% tariffs between the EU and US. Strategists suggested that markets are increasingly pricing in an imminent agreement — a potential turning point after months of uncertainty.
Despite the positive tone, European equities remain roughly 2% below their March peaks, reflecting the lingering impact of slowing global growth and tight financial conditions.
Australia
Australian shares are poised to open lower, with SPI futures down 37 points or 0.4% to 8639. This follows Thursday’s 0.3% decline in the S&P/ASX 200 Index, which closed at 8709.4. Investors took profits after a strong prior session, while a lack of major catalysts and uncertainty around global trade kept risk appetite in check.
Energy, industrials, and real estate stocks led the retreat, while gold miners declined as spot prices eased. Evolution fell 2.7%, Regis Resources lost 2.2%, and Northern Star dropped 2% as it flagged production issues at its Kalgoorlie Super Pit and scrapped its hedging policy to fully capitalise on high gold prices.
Financials were under pressure after Macquarie Group fell 5.1% following news of its CFO’s departure and shareholder backlash at its AGM. However, healthcare offered some support, with CSL rising 1.5% and Sonic Healthcare up 1.3%. Analysts noted that the sector may be poised for a rebound following months of underperformance.
In corporate news, Bapcor shares cratered 28.4% after warning of weaker May-June trading, announcing $50 million in writedowns, and confirming board-level changes. Fortescue rose 4.3% after reporting record iron ore shipments and signalling further growth as costs fall. Lynas advanced 5% after signing a supply agreement with Korean firm JS Link, and Karoon Energy dipped 2.8% despite reporting higher production volumes.
RBA Governor Michele Bullock added a local layer of caution, suggesting in a Sydney speech that inflation may prove stickier than hoped, thereby reducing the odds of an imminent rate cut.
Investors will be watching for quarterly results from Whitehaven Coal and Newmont later today, which could move mining and resource names. Globally, all eyes are turning toward the Federal Reserve’s upcoming meeting and the final shape of the US-EU tariff deal. With AI-driven optimism still fuelling risk assets and inflation proving sticky, the balance between growth and policy caution remains delicate. Traders should prepare for increased volatility as earnings season ramps up and macro uncertainty persists.
Commodities
Commodity prices were mixed overnight. Oil gained ground, with West Texas Intermediate up 1.5% to USD 66.20 per barrel and Brent crude climbing 1.2% to USD 69.30, supported by improved demand forecasts and an easing of trade uncertainty. Iron ore prices rose 0.8% to USD 105.35 per tonne, bolstered by strong shipping data from Australian producers.
Gold slipped 0.5% to USD 3,370.69 an ounce as risk sentiment improved and safe-haven flows ebbed. The pullback follows recent strength that saw bullion push towards record highs.
In currency markets, the Australian dollar weakened by 0.2% to US65.91¢, reflecting diminished expectations for rate differentials and modestly weaker commodity prices. The US dollar strengthened broadly, with the Bloomberg Dollar Spot Index up 0.2%.
Cryptocurrencies were firmer, with Bitcoin gaining 0.9% to USD 119,053 and Ethereum jumping 4.7% to USD 3,738, lifted by favourable technical momentum and rising institutional interest.
Economic Calendar
No major data
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
