United States
The S&P 500 slipped 0.3 per cent overnight, marking its second straight decline after a remarkable run that has already delivered 12 per cent gains this year. The tech-heavy Nasdaq 100 matched this decline, ending down 0.3 per cent as the artificial intelligence enthusiasm that has driven markets higher appeared to wane.
Micron Technology disappointed despite posting an upbeat forecast, with its shares tumbling as results failed to meet the market’s elevated expectations. The semiconductor giant’s guidance, while showing robust AI-related demand, wasn’t enough to satisfy investors who have pushed the stock to nearly double this year. The combination of Alibaba’s increased AI spending commitments failing to lift sentiment and Treasury yields holding near post-Fed meeting highs created a cautious atmosphere. Long-term yields remained elevated, with the 10-year climbing four basis points to around 4.15 per cent.
Bank of America’s equity strategists noted that the S&P 500 is trading at statistically expensive levels on 19 of 20 valuation metrics. The debate continues over whether these elevated multiples represent a new normal for markets dominated by mega-cap technology stocks or signal an overdue correction ahead.
Intel’s search for strategic partners continued, with reports emerging that the struggling chipmaker has approached Apple about securing an investment. This follows recent investments from Nvidia and SoftBank as Intel attempts to shore up its business. Oracle, meanwhile, tapped debt markets with a massive US$18 billion investment-grade sale, underscoring continued corporate confidence despite market jitters.
The US dollar index strengthened 0.6 per cent, adding pressure to commodity prices and emerging market assets. Policy concerns also weighed on sentiment, with South Korea’s prime minister warning that major investment projects in the US could stall until visa issues are resolved.
Europe
European markets presented a mixed picture, with the Stoxx 600 declining 0.2 per cent as investors tempered optimism about the trajectory of US interest rate cuts. However, defence stocks emerged as clear winners after President Trump’s hawkish rhetoric on Russia intensified. Trump’s suggestion that NATO countries should shoot down Russian aircraft violating their airspace sent defence names soaring. Rheinmetall climbed 3.5 per cent to a record closing level, while BAE Systems gained 2.2 per cent. The president’s more sympathetic tone on Ukraine’s war prospects further bolstered the sector.
The energy sector also benefited from geopolitical tensions, rising 1.5 per cent as oil prices jumped on supply disruption concerns. TotalEnergies advanced 2.1 per cent after winning an auction for France’s largest offshore wind farm, while Shell added 0.8 per cent. The sector closed at its highest level since May 2024.
Automotive stocks struggled, with Stellantis leading the decline after falling 3.3 per cent following announcements of temporary production halts at European plants due to weak demand. Ferrari dropped 1.4 per cent and Michelin fell 1.0 per cent as the sector grappled with softening consumer demand.
Software giant SAP bucked the negative trend, gaining 0.8 per cent after striking deals with OpenAI and AWS. The chemicals sector underperformed, falling 1.1 per cent, with BASF announcing its exit from the hydrosulphites business, contributing to sector weakness.
Australia
Australian futures point to a challenging start this morning, with ASX 200 futures down 41 points or 0.5 per cent to 8,769. The local market faces headwinds from both global equity weakness and specific corporate developments.
Macquarie Group will be in focus after agreeing to pay $321 million to Shield Master Trust investors following a deal with ASIC. The settlement affects approximately 3,000 investors who will receive their full investment back by September 30. ASIC’s investigation found Macquarie failed to place the Shield Master Fund on a watch list for heightened monitoring.
Premier Investments released mixed results, posting a 31.1 per cent rise in statutory net profit to $338.2 million, primarily driven by the sale of its Apparel Brands portfolio to Myer. However, underlying performance was weaker, with profit from continuing operations falling 22.5 per cent to $144 million. Peter Alexander sales rose 7.7 per cent to a record $548 million, while Smiggle revenue declined 10.7 per cent.
First Sentier Investors announced Harry Moore as its new CEO, effective January 1, replacing outgoing chief Mark Steinberg. Moore, currently chief commercial officer, has been with the $200 billion asset manager since 2010 and previously served as global head of distribution.
Today’s local agenda includes job vacancies and wealth data releases, with Suncorp hosting its annual general meeting. Several companies trade ex-dividend today, including AMO, PRG, RHI, SB2, TIP, VBC, and WWG.
Commodities and currencies
Copper prices soared after Freeport-McMoRan declared force majeure on contracted supplies from its giant Grasberg mine in Indonesia, the world’s second-largest copper source. The metal jumped 3.6 per cent to US$10,336.50 a tonne on the London Metal Exchange, its highest level in more than a year. The accident’s impact highlights the copper market’s vulnerability to supply shocks.
Oil extended gains, with Brent crude rising 2.2 per cent to US$69.14 a barrel as geopolitical tensions escalated. West Texas Intermediate crossed its 100-day moving average of around US$64.68, triggering technical buying.
Gold retreated 0.7 per cent to US$3,736.16 an ounce as the stronger US dollar weighed on the precious metal, though prices remained near record highs reached earlier this week.
The Australian dollar weakened 0.2 per cent to US65.83 cents, reflecting broad US dollar strength and concerns about the domestic growth outlook following yesterday’s higher-than-expected inflation data.
Economic Calendar
AU:
- Job Vacancies QoQ 11:30
US:
- GDP Annualised QoQ 22:30
- GDP Price Index 2Q 22:30
- Wholesale Inventories MoM 22:30
- Durable Goods Orders Aug 22:30
- Initial Jobless Claims Sep 22:30
- Existing Home Sales Aug 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.
