United States
US markets ended sharply lower on Friday as renewed trade tensions between Washington and Beijing rattled global sentiment. President Donald Trump’s threat of a “massive increase” in tariffs on Chinese goods triggered the steepest decline in six months, with the S&P 500 down 2.7 per cent, the Nasdaq 100 plunging 3.5 per cent, and the Dow Jones Industrial Average off 1.9 per cent.
The sell-off reflected investor anxiety that escalating trade hostilities could derail corporate earnings just as the US enters the third-quarter reporting season. The volatility index, or VIX, surged above 21, its highest level since April, while traders sought refuge in bonds, sending the US 10-year yield down 11 basis points to 4.03 per cent.
The decline was broad-based, with AI-linked stocks leading losses after a prolonged rally that had lifted valuations to near-record highs. Analysts said the tariff threat served as a tipping point for a market already vulnerable to a pullback following months of complacency and stretched positioning.
Commodity markets mirrored the risk-off mood. West Texas Intermediate crude sank 4.3 per cent to USD 58.84 a barrel, copper and other base metals slumped, and gold climbed 0.8 per cent to USD 4,010 an ounce. The US dollar softened against most peers as investors moved into defensive assets.
Corporate news was mixed. Tesla reported higher September shipments from its Shanghai factory, while Alphabet’s Google became the first company in the UK designated under new antitrust rules for “strategic market status.” China, meanwhile, imposed new port fees on US ships and launched an antitrust probe into Qualcomm, deepening the tit-for-tat measures ahead of a planned Trump-Xi meeting later this month.
Europe
European shares also finished the week on a weak note, with the Stoxx 600 down 1 per cent as Trump’s tariff comments reverberated through global markets. The sell-off was accentuated by easing Middle East tensions, a ceasefire in Gaza, which sent defence and energy stocks lower.
Technology shares were among the hardest hit, sliding 3.1 per cent, led by ASML, SAP, and Prosus, all down more than 3 per cent. Automakers fell 2.2 per cent, with Stellantis dropping 6.7 per cent after a pre-close update and BMW off 2.3 per cent. Chemicals and industrials also struggled as investors trimmed exposure to cyclical sectors.
A few bright spots remained. Utilities extended their outperformance, reaching their highest levels since 2008 on the back of resilient earnings and lower bond yields. Telecoms edged higher, helped by gains in Nokia and KPN, while food and consumer staples stocks such as Nestlé and Imperial Brands posted modest rises as investors rotated into defensive names.
Bond yields declined across Europe, with Germany’s 10-year Bund yield down six basis points to 2.64 per cent as traders bet renewed trade frictions could delay further rate hikes by central banks.
Australia
The S&P/ASX 200 futures were pointing to a 0.9 per cent decline at 8,896 ahead of Monday’s open, tracking the global downturn. Local investors are expected to follow Wall Street lower, though analysts note that the pullback could prove short-lived as traders look to “buy the dip” in quality names.
Trade tensions and commodity price swings will likely set the tone. Iron ore rose 1.6 per cent to USD 106.50 a tonne, partially offsetting weakness in base metals and oil. Brent crude fell 3.8 per cent to USD 62.73 a barrel, while gold extended gains above USD 4,000 an ounce, buoyed by safe-haven demand.
In stock-specific news, ANZ Group is expected to outline a new cost-cutting and technology-revamp plan, while BHP received Brazilian antitrust approval for its Corex joint venture. Fortescue Metals chose China over the UK for electric-truck component sourcing. Broker updates included Eagers Automotive, upgraded to Hold by Jefferies, and Medical Developments, raised to Buy at Bell Potter.
The economic calendar is heavy this week, with Rio Tinto, AMP, Santos, and other majors reporting quarterly results. Attention will also turn to the Reserve Bank’s meeting minutes and Thursday’s labour-force report, providing further clues on the domestic outlook.
Commodities and currencies
Global commodity markets remain under pressure from renewed trade uncertainty. Oil led declines, with Brent tumbling nearly 5 per cent to USD 62.08 a barrel as investors priced in lower demand amid slowing global growth expectations. Copper dropped 4.3 per cent to USD 4.90 a pound, reversing part of its recent China-driven rally, while iron ore prices firmed modestly on signs of stabilising Chinese steel demand.
In currency markets, the Australian dollar slid 1.3 per cent to US 64.74 cents, its biggest weekly fall since March, as risk sentiment soured and traders shifted towards the US dollar and yen. The euro gained 0.5 per cent to USD 1.1619, while Bitcoin plunged more than 9 per cent to USD 110,000 following over USD 6 billion in global crypto liquidations.
Bond markets extended gains as investors sought safety, with yields falling in the US, Europe, and Australia. The Australian 10-year bond yield closed around 4.36 per cent, only slightly higher on the day but down on the week amid expectations that global volatility could temper further tightening.
Economic Calendar
No major announcements
This article was written by James Woods, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
