United States
Wall Street delivered another record-setting session as investors embraced softer inflation figures and signs of a cooling labour market, cementing expectations the Federal Reserve will cut rates next week. The S&P 500 rose 0.8% to 6,587.47, while the Dow Jones Industrial Average climbed 1.4% to 46,108, with 24 of its 30 components closing higher. The Nasdaq 100 added 0.6%, supported by technology names after Adobe posted a solid outlook on the back of AI-driven demand.
The key driver was August’s consumer price index, which rose 0.4% for the month and 2.9% year-on-year, in line with expectations. Core CPI lifted 0.3%, matching July’s pace. At the same time, initial jobless claims surged by 27,000 to 263,000 — the highest since October 2021 — reinforcing perceptions of a labour market slowdown. Analysts said the combination of tame inflation and weaker jobs data provided the “all-clear” for the Fed to begin policy easing.
Treasuries rallied, with the 10-year yield briefly dipping below 4% before ending at 4.02%. Market pricing now leans toward three quarter-point cuts between September and December, taking policy back toward a neutral setting by year-end. Strategists noted that while inflation remains above target, the Fed’s focus has shifted squarely to preserving employment, especially after downward revisions to jobs data and last week’s soft non-farm payrolls report.
Gold prices briefly hit an inflation-adjusted record, surpassing the 1980 peak, before settling modestly lower at USD 3,637.02 an ounce. The rally has been fuelled by investors seeking a hedge against deficit concerns and currency weakness. Meanwhile, corporate news added further colour: Boeing flagged more delays for its 777X programme, Paramount Skydance was reported to be eyeing Warner Bros. Discovery, and Micron gained on upbeat AI-related demand forecasts.
Europe
European equities tracked Wall Street higher, buoyed by the US CPI outcome and an unchanged stance from the European Central Bank. The Stoxx 600 gained 0.6%, with broad-based strength led by autos, construction, and defence.
Automakers outperformed, with Stellantis surging 9.2% after its CEO provided upbeat commentary on dealer inventory levels and tariff talks with Washington. Volkswagen added 1.4% as it advanced plans for a unit sale, while Ferrari edged 0.6% higher. Industrials also made headlines: BAE Systems rallied 6.3% on news it would accelerate shipbuilding to meet rising demand, while Airbus and Rolls-Royce both closed at record highs.
Sector performance was mixed. Chemicals, banks, and retailers posted healthy gains, with Inditex up 2.7% following upgrades. Energy lagged as Brent crude fell 1.8% to USD 66.30 a barrel, reversing some of its recent resilience amid concerns about slowing demand. Utilities and healthcare underperformed, with Iberdrola slipping after agreeing to buy an extra 30% stake in Brazil’s Neoenergia for USD 2.2 billion. Technology was little changed, with SAP down 1.7%.
The ECB’s decision to keep rates unchanged for a second meeting was expected, and attention now turns to how soon policymakers might follow the Fed in easing. For now, stability in European bond markets — Germany’s 10-year yield held at 2.66% — suggests investors are positioning cautiously.
Australia
The local market is set for a stronger open after global gains, with ASX 200 futures pointing up 43 points, or 0.5%, to 8,850. That follows Thursday’s close of 8,805, down 25.4 points. The rally on Wall Street and easing bond yields should provide a supportive backdrop.
Stocks in focus today include BHP, ANZ, Qantas, and the ASX itself. BHP’s ADRs rose 1.8% in New York, implying a premium to its Sydney close. Rio Tinto ADRs were also firmer. ANZ announced its chief risk officer will step down as part of a broader internal reshuffle, while Qantas received a new “Neutral” rating with a price target of AUD 11.90 from BNPP Exane. The ASX was also rated “Neutral” by Mizuho with a AUD 62 target.
On the corporate front, Ventia extended its contract with the City of Sydney, securing AUD 100 million in work across key assets through to 2028. Meanwhile, SunCable announced plans to pivot toward Australian data centres before pursuing exports, highlighting the shifting focus in energy transition projects.
Australia’s bond market mirrored moves abroad, with three-year yields down 2.3bps to 3.42% and 10-year yields easing 3.8bps to 4.23%. Currency moves were also supportive, with the Australian dollar climbing 0.7% to 66.61 US cents, helped by super funds scaling back foreign currency risk. The Reserve Bank of Australia will also be in focus today, with Assistant Governor Brad Jones scheduled to speak at a Sydney conference.
Commodities and currencies
Commodities were mixed. Gold eased 0.2% to USD 3,633.37 an ounce, paring back earlier gains after its record-breaking run. Oil prices weakened, with West Texas Intermediate falling 2.2% to USD 62.25 a barrel and Brent settling at USD 66.30, as demand concerns outweighed geopolitical supply risks. Iron ore also softened, down 1.3% to USD 105.45 a tonne.
Currency markets reflected shifting expectations for Fed policy. The US dollar slipped, with the euro rising 0.4% to USD 1.1737 and the pound adding 0.4% to USD 1.3578. The yen firmed modestly, trading at 147.17 per dollar. In the region, the New Zealand dollar gained 0.6% to 59.77 US cents.
Cryptocurrencies also firmed, with Bitcoin up 0.7% to USD 114,460 and Ether up 2.1% to USD 4,423. Both assets have been buoyed by broad risk-on sentiment following the Fed’s dovish tilt.
Economic Calendar
US:
- University of Michigan Sentiment Sep 00:00
This article was written by James Woods, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
