United States
Wall Street extended its record-setting run, though gains were measured as investors leaned further into the view that the Federal Reserve will start cutting rates next month. The Dow rose 1%, the S&P 500 added 0.3% and the Nasdaq edged 0.1% higher, with mega-cap tech again anchoring the advance. Apple and Amazon firmed, helping offset softer patches elsewhere. Bond markets did much of the heavy lifting: the 10-year Treasury yield slipped to around 4.23% as a fresh wave of buying pushed yields lower and volatility eased, with the VIX falling to 14.49, a new low for the year.
Rate expectations continue to harden. Futures now ascribe a 100% chance of at least a 25-basis-point reduction in September and a small possibility of a larger move. Policymakers left rates on hold at 4.25%–4.50% last month, but the market narrative has pivoted as labour indicators soften and inflation moderates. The next hurdles arrive tonight with producer prices and weekly jobless claims, followed by retail sales and consumer sentiment. A cooler inflation pulse and steady-to-softer labour readings would validate the bond rally and, by extension, support equity multiples. Any upside surprise could re-steepen yields and test the durability of the current highs.
Beyond macro, Washington headlines kept one eye on policy risk. Signals of a potential series of US rate cuts over coming quarters underpinned duration-sensitive corners of the market, while talk around technology export frameworks to China remains a background swing factor for chipmakers. For now, the dominant theme is straightforward: lower yields, lower volatility and resilient large-cap earnings continue to favour quality growth.
Europe
European equities advanced in step with the global rally. The Stoxx 600 gained 0.6%, led by consumer products and health care, while energy lagged alongside softer crude. Stock-specific moves were mixed, with a Scandinavian chip supplier jumping on better-than-expected earnings and a major wind-turbine manufacturer slipping after a profitability miss. At the index level, Europe remains range-bound since mid-May, caught between tariff uncertainty and uneven growth. The prospect of a Fed pivot has been a tailwind for defensives and quality growth, particularly given the recent drift lower in the US dollar and global bond yields.
Attention turns to second-quarter GDP prints for the UK and euro area later today. Signs of stabilisation would bolster the case for Europe to participate more fully in any disinflation-led global upswing. Conversely, softer outcomes would keep performance reliant on multiple expansion rather than meaningful earnings upgrades, reinforcing the current “grind” rather than a decisive breakout.
Australia
The S&P/ASX 200 notched its sharpest fall in nearly two weeks, dropping 53.7 points (-0.6%) to 8,827.10 after opening at a record high. The reversal was driven by a steep pullback in the market’s largest constituent, Commonwealth Bank of Australia, which fell 5.4% as investors reassessed valuation and sector tailwinds following results. The weakness bled across financials: National Australia Bank declined 2.6% and Westpac fell 2.1%, while ANZ ended 0.2% lower.
Sector rotation was clear. Health care and miners outperformed as investors sought defensiveness and leverage to commodities. CSL rose 2.0% and Clarity Pharmaceuticals gained 5.3%. Iron ore names were firmer, with Fortescue up 1.4%, BHP up 1.1% and Rio Tinto up 1.0%, as futures consolidated recent gains around the US$100–105/t area amid expectations of further steel production adjustments in China. At the other end, utilities underperformed after AGL slumped 13.1% on weaker full-year core profit and tighter retail margins.
Corporate news stayed busy: Treasury Wine Estates rose 1.2% after lifting its final dividend and announcing a buy-back; Insurance Australia Group dipped 0.1% despite a stronger full-year profit; and Tyro Payments surged 11.5% on renewed takeover interest. Looking ahead, futures point to a firmer open (ASX 200 +31 points, +0.4% to 8,825) as lower global yields and subdued volatility provide a constructive backdrop.
Today’s focal point is the July labour force report at 11:30am AEST. Markets are braced for a modest jobs gain (around +25k) and an unemployment rate near 4.2%. A softer read would amplify chatter about consecutive RBA cuts following Tuesday’s reduction, supporting duration-sensitive sectors while keeping the pressure on bank margins. Results are also due from several high-profile names, including Telstra, Origin Energy, ASX and Suncorp, with Temple & Webster, Abacus Storage King and Pro Medicus on the docket. The blend of macro and micro catalysts should make for an active session.
Commodities and Currencies
Gold ticked higher to roughly US$3,355–3,356/oz as the dollar eased and real yields drifted lower, reinforcing bullion’s portfolio-hedge appeal. Oil was mixed: Brent fell 0.5% to about US$65.77/bbl while WTI edged up 0.1% to US$62.74/bbl. The split reflects persistent questions around global demand growth and the tug-of-war between OPEC+ supply signals and macro expectations. Iron ore slipped 0.7% to ~US$103.70/t but remains underpinned by hopes of Chinese steel output management—one reason miners were able to outperform despite the broader ASX pullback.
In currencies, the broad dollar index eased. The euro hovered near US$1.1705, the yen steadied around ¥147.30 per US dollar, and the offshore yuan was little changed near 7.18. The Australian dollar firmed to ~US$0.6546, supported by the risk-on tone and lower US yields. While a dovish Fed path typically provides a floor for the AUD, today’s local jobs data and the trajectory of the RBA’s easing cycle will be decisive for how much the currency can participate in any broader US dollar pullback. On the rates side, the Australian 10-year yield tracked the US benchmark, sitting close to 4.22%.
Crypto assets leaned higher alongside broader risk sentiment. Bitcoin climbed about 2.4% to near US$123,000, and Ether rose around 0.5% toward US$4,740. Lower-for-longer rate expectations and subdued volatility continue to provide a tailwind for the space.
Economic Calendar
AU:
- Employment Change (Q2) – 11:30am
- Unemployment Rate (Q2) -11:30am
- Participation Rate (Q2) – 11.30am
EU:
- Employment YoY – 7:00pm
- GDP (Seasonally Adjusted) YoY – 7:00pm
US:
- PPI MoM – 10:30pm
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
