United States
The S&P 500 extended its winning streak on Friday, closing higher for a fifth consecutive session resetting a record high. Investor sentiment was lifted by optimism surrounding trade negotiations with the European Union, following recent agreements with Japan, Indonesia, and the Philippines. Over the weekend, the EU and the United States reached a deal that included the imposition of a blanket 15% tariff on all EU exports to the U.S.
In additional trade developments, the South China Morning Post reported that China and the U.S. are to extend their trade truce by another 90 days.
At the close, the S&P 500 rose 25 points (+0.40%) to finish at 6,388, with nine of the eleven sectors ending in positive territory. The materials sector led the gains. The Nasdaq Composite also reached a new record, climbing 50 points (+0.24%) to 21,108, while the Dow Jones Industrial Average gained 0.47% to close at 44,901.
Earnings season continued to exceed expectations, with the majority of companies reporting stronger-than-anticipated results. So far, the impact of tariffs has been less severe than feared. An economist from BMO Capital Markets commented, “The market is betting that a 10–15% tariff level can be absorbed through a manageable mix of margin compression among producers and importers, along with some modest pass-through to consumers.” However, a number of consumer-facing companies have flagged early signs of weakening demand.
In company news, Tesla rebounded 3.52% after Thursday’s sharp decline, supported by bargain hunters and news of its upcoming robotaxi launch in San Francisco. Alphabet shares gained 0.46%, continuing their recent momentum. Charter Communications reported better-than-expected earnings, but a drop in internet subscribers led to an 18.49% plunge in its share price. Other internet providers also declined in sympathy. Intel fell 8.53% after announcing a 15% workforce reduction and plans to scale back a planned factory expansion.
Deckers Outdoor, the parent company of UGG, surged 11.35% after beating earnings expectations, driven by strong sales across its Hoka and sandal product lines. Meanwhile, the merger between Paramount and Skydance received approval from the Federal Communications Commission on Thursday, though Paramount shares slipped 1%.
Bond markets were relatively stable. The yield on the 10-year U.S. Treasury fell 2 basis points to 4.39%, while the 2-year yield held steady at 3.92%.
Looking ahead, markets will be focused on earnings results from Apple, Amazon, and Microsoft. The August 1 deadline for imposing tariffs on nations without trade agreements is also drawing near, with many expecting a further extension. Additionally, the Federal Reserve will meet on Wednesday to decide on interest rates, with consensus pointing to no change. Later in the week, investors will closely watch the release of the core Personal Consumption Expenditures (PCE) index—the Fed’s preferred gauge of inflation.
Europe
European equity markets edged lower on Friday as traders remained cautious ahead of a potential EU–US trade agreement. Speculation of a weekend deal failed to boost sentiment, with investors opting to wait for confirmed details. The deal was eventually finalised over the weekend, introducing a 15% tariff on eurozone exports to the United States—at the lower end of market expectations.
Adding to the subdued mood were comments from European Central Bank President Christine Lagarde, who stated that the eurozone economy was performing in line with projections. Her remarks signalled to markets that interest rates may remain on hold, despite expectations among economists for a rate cut in September.
The EuroStoxx 600 declined 0.29% to close at 549.95, with nine of its sectors posting marginal losses. In the UK, the FTSE 100 also slipped, falling 0.20% to 9,120.
Corporate earnings results released on Friday were mixed. Sports apparel maker Puma cut its full-year outlook following a weaker-than-expected report, sending its shares down 15.96%. In contrast, Carrefour, Europe’s biggest food retailer was higher by 5.54% as it reported its half year results, better than expected led by its French stores.
The auto sector outperformed, rising 2.25%, led by Volkswagen which jumped 4.55%. The stock initially plunged on disappointing results but rebounded after the company announced plans to accelerate cost-cutting efforts in response to rising tariffs. BMW gained 2.77%, while Stellantis added 3.14% in European trading.
In fixed income markets, bond yields edged higher. Germany’s 10-year yield rose 2 basis points to 2.71%, while the UK 10-year gilt yield increased by 1 basis point to 4.63%.
Australia
The Australian equity market is expected to begin the week on the back foot, with ASX futures trading 5 points lower in the Friday evening session—down 0.6%. The continued decline in iron ore prices pressured sentiment, with U.S.-listed BHP shares falling a further 0.80% to A$40.47 in US trade. The Australian dollar also weakened, trading at US$0.6566, down 0.35%.
On Friday, the ASX 200 closed 42 points lower, a decline of 0.49%, finishing the session at 8,666.90. The materials sector—which had supported the market in previous sessions—was the worst performer, dropping 1.73% as commodity prices pulled back from recent highs. In contrast, the energy sector was the sole bright spot, gaining 1.80%, while nine of eleven sectors finished in the red.
The fall in iron ore prices during Asian trade led to reduced exposure to major miners. BHP fell 1.92% to $40.80, and Fortescue dropped 3.42% to $18.35. Gold miners also declined, with Evolution Mining down 3.18% to $7.30 and Emerald Resources falling 1.86%. Newmont, however, rose 3.81% after reporting strong second-quarter earnings and announcing an additional US$3 billion share buyback.
The energy sector’s strength was driven largely by Woodside, which rallied 3.72% to $26.20 following several broker upgrades.
Bank stocks continued to ease on valuation concerns. Westpac slipped 0.78% to $33.03, while NAB fell 0.40% to $37.51. NAB also finalised its enforceable undertaking with AUSTRAC, the anti-money laundering regulator. While AUSTRAC acknowledged the bank had met its obligations and made meaningful progress, it stopped short of offering a clean bill of health. An independent auditor recommended further enhancements to NAB’s anti-money laundering and counter-terrorism systems, which CEO Andrew Irvine confirmed would be implemented.
In fixed income, Australian bond yields moved higher after hawkish commentary from RBA Governor Michele Bullock on Thursday prompted markets to adjust expectations from three interest rate cuts to two for the remainder of the year. The 10-year yield rose 5 basis points to 4.34%, while the 2-year yield increased 8 basis points to 3.41%, with the domestic curve underperforming global counterparts.
Commodities
The recent rally in iron ore prices eased on Friday, as traders took profits amid mounting concerns about the strength of Chinese demand. Losses during the Asian trading session carried through to the New York session, with iron ore closing at US$101.80 early Saturday morning—a decline of 3.3% from the previous day. Copper prices also softened, falling 1.09% to US$9,769 per tonne on the London Metal Exchange (LME).
Worries over Chinese corporate growth were reinforced on Sunday, following the release of industrial profit data. The figures showed a further decline in June, as producer price deflation continued to squeeze margins and domestic demand remained weak.
Oil prices also declined, pressured by expectations of increased global supply. West Texas Intermediate (WTI) crude fell 1.32% to US$65.16, while Brent crude dropped 74 cents, or 1.07%, to settle at US$68.44. The sell-off was driven by reports that the United States may allow Venezuela to resume limited oil operations under existing sanctions—starting with a potential deal involving U.S. producer Chevron—raising the likelihood of additional supply entering the market.
Gold prices weakened as well, falling 0.93% to US$3,337, as optimism over a potential EU trade agreement dampened safe-haven demand. The decline was further exacerbated by a stronger U.S. dollar, which rose 0.30% on the Bloomberg Dollar Index. Silver mirrored the trend, sliding 2.32% to US$38.16.
Economic Calendar
US:
- Dallas Fed Manufacturing Activity Index (Jul) – 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.
