United States
Wall Street began the week quietly as investors braced for the highly anticipated Federal Reserve gathering at Jackson Hole later this week. The S&P 500 and Nasdaq each ended virtually unchanged, while the Dow slipped 0.1%. Traders appear hesitant to extend last week’s record-breaking rally ahead of Chair Jerome Powell’s Friday speech, which is expected to outline the Fed’s new policy framework and provide hints on the path for interest rates.
Bond markets remain finely balanced. The 10-year Treasury yield edged up two basis points to 4.34%, while the two-year yield rose to 3.77%, reflecting uncertainty over the scale and pace of prospective rate cuts. Interest-rate swaps suggest markets are pricing in an 80% chance of a quarter-point reduction in September, with two cuts fully anticipated by year-end.
Corporate news provided mixed signals. Intel shares were in focus following reports that the Trump administration may take a 10% stake in the chipmaker. Retail heavyweights Walmart and Target will report this week, offering a crucial read on consumer resilience under the ongoing tariff regime. Elsewhere, Palo Alto Networks raised its earnings outlook due to strong demand for cybersecurity services, while Starbucks announced a 2% pay increase for salaried North American staff. Novo Nordisk surged after slashing Ozempic prices for US cash customers and securing FDA approval for its obesity treatment, Wegovy, in the treatment of liver disease.
Europe
European equities inched higher, with the Stoxx 600 adding 0.1%, though sectoral moves were mixed. Healthcare led gains after Novo Nordisk jumped 6.6% on the same positive US drug news. Vestas Wind Systems climbed more than 15% after US authorities issued favourable guidance on renewable energy tax credits, bolstering clean-energy sentiment. By contrast, basic resources lagged as miners retreated, with Glencore, Rio Tinto and Anglo American all lower on concerns over higher costs and weaker commodity demand.
Banks and insurers were also under pressure, with Commerzbank down 3.2% after a downgrade and Allianz sliding 1.1%. Defensive sectors such as utilities and chemicals declined, while media, telecoms and retail notched modest gains. Notably, Boozt and Dr Martens rallied strongly after broker upgrades, underlining selective optimism in consumer-facing names.
Geopolitical developments also loomed. Investors tracked US President Donald Trump’s meeting with Ukraine’s Volodymyr Zelenskiy, with discussions of a potential trilateral peace summit involving Russia. The political backdrop added a layer of caution, keeping trading volumes subdued across the region.
Australia
Australian shares are set to open softer, with futures pointing to a 23-point decline in the ASX 200 to 8,874. The market faces a busy day ahead, with key earnings reports expected from heavyweights like CSL, BHP, Woodside Energy, and HMC Capital. These results will offer important insights into the performance of sectors such as healthcare, resources, and energy. Investors are particularly keen to assess how companies are navigating the challenges of higher input costs, labour shortages, and ongoing global supply chain disruptions.
On the macroeconomic front, a key focus will be the August consumer confidence data, set to be released at 10:30am today. Economists at NAB expect a slight recovery in sentiment following the RBA’s interest rate cut earlier in August, which could provide some relief to households weighed down by rising living costs. The confidence index has been volatile in recent months, and any rebound in August would likely indicate that Australians are regaining confidence in their financial future amid the recent rallies in local equities and commodities markets.
Policy developments will also be closely monitored, with the Economic Reform Roundtable in Canberra beginning today. Prime Minister Anthony Albanese, Treasurer Jim Chalmers, and RBA Governor Michele Bullock are among the key speakers. Their discussions around fiscal policy, productivity reform, and economic growth will be crucial for guiding investor expectations regarding Australia’s future economic trajectory. Market participants will be listening for signs of how the government plans to balance fiscal support with measures to curb inflation. Any surprises in this area could trigger significant market moves, especially in sectors like infrastructure, housing, and banking.
Yesterday, the ASX 200 closed at 8,959, up 20.7 points, or 0.23%, with energy and financial sectors leading the charge. Notably, Hub24 reported record inflows, continuing its growth streak, while Monadelphous announced a healthy dividend increase of 72¢ per share, underscoring strong cash flows in its industrial services business. These results were well received, highlighting the resilience of domestic businesses in the face of global economic uncertainty.
However, Sims Metal faced headwinds after warning of a potential oversupply in the Chinese steel market. The company’s stock fell sharply as concerns over slowing demand and rising inventory levels in China raised alarms about the profitability of metals and recycling businesses. Despite this, the broader industrial sector remains supported by ongoing infrastructure projects, particularly in the resources sector, where demand for copper, lithium, and other critical minerals is expected to remain robust.
Energy stocks were also boosted by positive moves in the oil and clean energy sectors. Vestas Wind Systems, which rose sharply on news that the US Treasury Department had issued favourable guidance on clean energy tax credits, reflected broader optimism around renewable energy investments. Additionally, the outlook for Woodside Energy remains solid, with global energy demand continuing to grow as countries strive to secure stable supplies amid geopolitical tensions, particularly in the Middle East.
As for the Australian dollar, it remains under pressure, easing by 0.2% to US64.93¢. While this is partly due to a stronger US dollar, the AUD also faces headwinds from the global risk-off sentiment and ongoing concerns about China’s economic recovery. Australia’s reliance on commodities exports—particularly to China—means that any slowdown in the Chinese economy could weigh further on the Australian dollar, which would impact Australian consumers and investors.
The energy sector and commodity-related stocks remain a key area of focus for the Australian market. As the global demand for energy continues to increase, Australia’s position as a major resource exporter puts it in a strong position. However, global uncertainties, including the shifting policy environment in the US and Europe, continue to pose risks to the outlook for commodities and local exporters.
Commodities
Oil prices firmed, with Brent crude up 1.1% to US$66.54 a barrel and WTI rising 0.9% to US$63.34, as supply-side factors offset demand worries. Iron ore slipped 0.2% to US$101.70 a tonne, continuing its choppy trading pattern. Gold was steady at US$3,332 an ounce, with investors reluctant to take strong positions before Powell’s Jackson Hole speech 9†Wall currency markets, the Australian dollar eased 0.2% to US64.93¢, weighed by cautious risk sentiment and a stronger greenback. The Bloomberg Dollar Spot Index rose 0.2%, with the euro and pound each falling 0.3% against the US dollar, while the yen weakened 0.4% to 147.83 per dollar. Bitcoin dropped 1.1% to US$116,368, while Ether slumped 2.6%.
Economic Calendar
US:
- Housing Starts and Building Permits (Jul) – 10:30pm
AU:
- Westpac Consumer Confidence MoM – 10:30am
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
