United States
Wall Street traded mixed overnight, with major indices eking out modest gains despite political uncertainty as the US government shutdown entered its second day. The S&P 500 added 0.1% to 6715.35, notching its 30th record high this year, while the Nasdaq climbed 0.4% on the back of strong demand for technology shares. The Dow Jones Industrial Average rose 0.2%.
Tech momentum continued to dominate, with Nvidia setting a fresh record high and Apple closing in on one of its own. Sentiment was buoyed by an OpenAI share sale valuing the company at $500 billion, which spurred enthusiasm across US chip stocks.
In contrast, Tesla slumped 5.1% despite reporting a surprise lift in quarterly vehicle sales. Analysts pointed to investor caution over the expiry of federal EV tax credits, which had accelerated consumer purchases ahead of the deadline.
The backdrop of political wrangling in Washington weighed on confidence, with Republicans pressing for permanent job cuts as part of negotiations to reopen the government. The shutdown delayed key labour-market data, including jobless claims and the non-farm payrolls report, which investors now expect will be postponed. Without these inputs, economists suggest the Federal Reserve may be hesitant to move on policy at its late-October meeting.
Despite the uncertainty, the American Association of Individual Investors’ survey showed optimism creeping higher, with 42.9% of respondents bullish on the six-month outlook, up from 41.7% the prior week. Treasury yields dipped slightly, with the 10-year yield easing to 4.08%.
Europe
European equities rallied to new highs, with the Stoxx 600 closing 0.5% stronger, led by gains in autos and technology. Investors ramped up bets on Fed rate cuts after softer US economic data suggested cooling conditions.
The automotive sector surged 2.4% after Ferrari received an analyst upgrade and Stellantis reported stronger-than-expected US deliveries, which pushed its shares up more than 8%. Mercedes-Benz also added 1.6%.
Technology shares kept pace, with the European tech index up 2.3% as demand for AI-linked stocks surged. ASML jumped 4.3%, while ASM International surged 6.6%. Industrials also provided a boost, led by Siemens, which advanced 4.2% on news it is considering spinning off part of its stake in Siemens Healthineers.
On the other side of the ledger, banks lagged, retreating 0.9% from recent highs. UniCredit, Intesa Sanpaolo and Santander led the declines. Experian also weighed, sliding more than 4% after a shake-up in how FICO scores are delivered to the mortgage industry.
Energy shares were softer, with the SXEP index slipping 0.3% as oil prices continued to retreat ahead of this weekend’s OPEC+ meeting.
Australia
Australian shares are set to open slightly lower, with futures pointing down 4 points or 0.04% to 8968 after a strong run in the previous session.
On Thursday, the S&P/ASX 200 surged 1.1% to 8,945.90, marking its best daily performance in six weeks. The rally was led by miners and banks as bullion hit a fresh record high, driving renewed interest in gold producers. Westgold soared 8.3% to its highest level since 1989, while Liontown Resources rallied nearly 10%. Among financials, Perpetual added 6.9%.
Decliners were found in the tech and communications sectors, with DroneShield tumbling almost 10% following a slump among its European peers, and Superloop down more than 8%. News Corp also fell 5.6% amid broader weakness in media stocks.
Today’s domestic calendar is light, with only New Zealand consumer confidence figures scheduled. Investors will be watching service-sector PMI data from France, the UK, and the US later in the day for further global cues.
Commodities and currencies
Commodity markets saw a mixed session. Gold retreated slightly from its recent record, down 0.2% to $US3,856.58 an ounce as the stronger US dollar encouraged profit-taking after a sharp five-day rally. Despite the dip, bullion remains up 47% year-to-date, supported by central bank buying and heavy inflows into gold-backed ETFs.
Oil extended its slide, with Brent crude down 1.6% to $US64.30 a barrel and WTI slipping under $US61, its lowest level in four months. The weakness reflects concern about oversupply as OPEC+ moves to restore more idle production.
Base metals performed more strongly. Copper climbed 1.1% to $US10,490 a tonne, its highest in more than a year, as supply disruptions in Indonesia and South America raised concerns about tightness. Lower interest rate expectations also supported demand.
In digital assets, Bitcoin broke above $US120,000, rising 2.8% in a move traders described as a safe-haven shift amid the US government shutdown. Crypto-linked stocks followed the rally, with Coinbase up nearly 8%.
Currency markets were steady. The Australian dollar eased 0.3% to US65.96¢, while the yen and euro traded flat.
Economic Calendar
EU:
- HCOB Eurozone Services PMI Sep 18:00
US:
- Change in Nonfarm Payrolls Sep 22:30
- Unemployment Rate Sep 22:30
- ISM Services Index 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.
