United States
Wall Street’s record-breaking run finally paused overnight as traders took profits after the S&P 500’s staggering 16 trillion US dollar rally from April lows. The S&P 500 slipped 0.4 per cent to 6,715, while the Nasdaq 100 dropped 0.6 per cent and the Dow Jones Industrial Average eased 0.2 per cent.
The pullback followed warnings that investor enthusiasm, particularly around artificial intelligence, had become stretched. Oracle slid 2.5 per cent after concerns about thinner margins in its cloud unit, while Tesla dropped 4.4 per cent despite unveiling cheaper sub-40,000 US dollar versions of its Model Y. Dell Technologies bucked the trend, rising 3.5 per cent after upgrading forecasts on strong demand.
Bond yields edged lower as a 58 billion US dollar Treasury auction attracted strong demand, with 10-year yields easing 3 basis points to 4.13 per cent. Federal Reserve officials maintained a cautious tone: Governor Stephen Miran said limited tariff impacts allowed room for further policy easing, while Minneapolis Fed President Neel Kashkari warned that cutting too aggressively could reignite inflation. Strategists at UBS Global Wealth Management and Citigroup suggested the equity rally may consolidate but remains underpinned by solid fundamentals.
Corporate headlines were mixed — Salesforce confirmed it would not pay ransom to hackers over a customer-data breach, while JPMorgan CEO Jamie Dimon said AI investments are already saving the bank roughly 2 billion US dollars a year. Johnson & Johnson was ordered to pay nearly 1 billion US dollars in a long-running talc case, and Dell doubled its multi-year earnings growth outlook.
Europe
European equities were subdued as political tensions in France and the US government shutdown dampened risk appetite. The Stoxx 600 slipped 0.2 per cent, but luxury names stood out after broker upgrades. Kering jumped to a 15-month high, while LVMH and Richemont also advanced following Morgan Stanley’s bullish call that named both as top picks in the luxury space.
Sector performance was mixed across the region. Chemicals and insurers posted modest gains, while banks lagged after ING fell more than 3 per cent on a weak quarterly update. Technology stocks also retreated from February highs as ASML and RELX came under pressure. Energy shares managed to rise slightly, supported by Shell’s upgrade to trading guidance amid stable oil prices.
Commodity-linked groups reflected a cautious tone, with Rio Tinto and Anglo American easing even as copper extended its rally and gold edged closer to 4,000 US dollars an ounce, marking the highest level since 1979. Defensive sectors such as utilities and consumer products found support as investors rotated toward lower-risk exposures in the face of political uncertainty and rich equity valuations.
Australia
The ASX 200 is poised to open slightly weaker after the Wall Street pause. SPI futures, down 1 point to 8,986, imply a modest dip from Tuesday’s 8,956 close.
James Hardie will be closely watched after its New York-listed shares surged 8 per cent on preliminary second-quarter sales beating forecasts. The move follows controversy around its 14 billion US dollar Azek acquisition, which has cost the company 8 billion US dollars in market value over six months.
BHP may gain as soaring gold prices are expected to boost national export revenues, surpassing LNG income. Domino’s Pizza named Dieter Haberl as Japan CEO, while South32 advanced its US partnership to unlock Alaskan mineral projects.
On the data front, the Reserve Bank of New Zealand meets today, with a rate cut to 2.25 per cent widely anticipated. Locally, home-rental data showed vacancies at record lows, reinforcing housing-supply pressures.
Australian bonds diverged from global trends — 10-year yields rose 5 basis points to 4.39 per cent, while the Aussie dollar slipped 0.6 per cent to 65.8 US cents.
Commodities and currencies
Commodity markets extended their rally, driven by safe-haven flows and supply concerns. Gold rose 0.5 per cent to 3,981 US dollars per ounce, after December futures briefly breached 4,000 US dollars — the first time in history. Brent crude added 0.4 per cent to 65.73 US dollars a barrel, supported by OPEC+ production moves and Saudi Arabia’s leadership stance. Iron ore steadied near 104 US dollars a tonne. Bitcoin retreated 2.5 per cent to 122,091 US dollars, while Ether lost 4 per cent.
In currency trade, the US dollar index strengthened 0.4 per cent against major peers as risk sentiment softened. The euro fell 0.5 per cent to 1.1651 US dollars, while the British pound slipped to 1.3420 US dollars. With gold rallying and the yen weakening past 152 per US dollar, traders are recalibrating positions ahead of upcoming US CPI data and the Federal Reserve’s next move.
Economic Calendar
US:
- MBA Mortgage Applications 22:00 *May be Impacted by US Gov Shutdown
This article was written by James Woods, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
