United States
Wall Street’s momentum stalled overnight, with major indices closing largely unchanged despite mixed economic data and patchy corporate performance. The S&P 500 remained flat, the Nasdaq 100 showed little movement, and the Dow Jones Industrial Average also ended the session without significant direction. Beneath the surface, market breadth was weak, with over 350 S&P 500 stocks closing lower. This undercurrent of caution emerged after the release of the July Producer Price Index (PPI), which rose by 0.9% month-on-month and 3.3% year-on-year—the largest monthly increase in three years. The surge in wholesale inflation, largely driven by services costs, reignited concerns that inflationary pressures may be re-emerging, even as consumer price growth appears to be cooling.
The inflation data prompted a shift in bond markets, with the 2-year US Treasury yield climbing to 3.73% and the 10-year yield moving up to 4.29%. While markets still expect a 25-basis point interest rate cut from the Federal Reserve in September, expectations for a more aggressive 50-point move were swiftly priced out. Policymakers have signalled openness to easing, especially as the labour market shows signs of softening, but sticky wholesale inflation could complicate their path.
On the corporate front, Intel rallied after reports emerged that the US government is considering taking a strategic stake to support domestic semiconductor production. Meanwhile, Applied Materials offered a cautious earnings outlook after the bell, weighing on tech sentiment. Apple rebounded, helping anchor broader tech performance, while small-cap stocks lagged sharply, with the Russell 2000 index falling 1.2%.
Europe
European equities continued their upward streak, posting a third consecutive day of gains. The Stoxx Europe 600 Index added 0.5%, closing at session highs despite briefly pulling back in reaction to the US inflation release. The advance was led by the insurance sector, which gained 0.9% thanks to upbeat earnings reports from Aviva and Admiral Group. Utilities and auto stocks also outperformed, suggesting a defensive tilt in investor positioning.
However, gains were not broad-based. Adyen, the Dutch payments firm, fell 4.9% after warning that revenue growth acceleration is unlikely this year due to ongoing trade-related uncertainty. In contrast, AutoStore Holdings soared nearly 40%, the most on record, following a standout earnings result that significantly beat market expectations. HelloFresh plunged 16% after downgrading its full-year earnings outlook and delivering a weaker-than-anticipated sales result, citing currency headwinds and softer demand.
Despite the rally, investor caution remains prevalent across Europe. Concerns about tariffs, stretched valuations, and a lack of fresh macroeconomic catalysts have kept many on the sidelines. The stronger-than-expected US PPI data only reinforced this hesitation, as traders reassessed the pace of global policy easing.
Australia
Back home, the ASX 200 rose 0.53% to 8,873.80, a record high, as investors remained optimistic following recent signals that interest rate cuts may be on the horizon. The local index was buoyed by gains in the healthcare and technology sectors. Cochlear was a key contributor to the day’s advance, reporting a 1% rise in FY25 underlying profit to $392 million and guiding for profit growth of 11–17% in the year ahead, driven by higher demand in developed markets. The company also declared a full-year dividend of $4.30 per share, supporting its reputation as a defensive growth play.
Not all earnings news was positive. HealthCo REIT reported a $89.3 million loss, reversing a $7.3 million profit a year ago, as revenues declined and uncertainty around its tenant Healthscope clouded the outlook. Despite this, the REIT maintained strong liquidity and affirmed that all hospitals under its management remain operational. The firm signalled that distributions will resume once the tenant situation stabilises.
Iron ore prices held steady at US$102.35 per tonne, having surged more than 20% since June. The gains have been underpinned by improved margins in China’s steel sector, with mill profitability returning to positive territory amid a pullback in output. Despite ongoing concerns about China’s property market, the stabilisation in industrial demand has supported optimism for Australian miners.
ASX futures suggest another modestly positive open on Friday, with investors awaiting earnings results from Mirvac and broader macro updates from overseas.
Commodities and Currencies
In commodities, oil prices rose, with WTI crude gaining 2.2% to US$64.04 a barrel, supported by expectations of tighter supply. Gold slipped 0.5% to US$3,338.48 an ounce, as rising bond yields and a stronger US dollar weighed on demand for safe-haven assets.
In currency markets, the Australian dollar weakened 0.7% to US64.98¢, in line with the global move into the greenback following the US inflation surprise. The euro and pound also retreated, each falling between 0.3% and 0.5%, while the yen remained under pressure.
Bitcoin dropped 4.1% to US$117,951, extending its recent pullback, with Ether falling 3.9%, as investor appetite for riskier assets cooled amid tightening financial conditions.
Economic Calendar
US:
- Retail Sales Advance MoM – 10:30pm
- University of Michigan Consumer Sentiment – 12:00am
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
