United States
Wall Street’s attempted recovery faded on Friday as investors reassessed the Federal Reserve’s path forward and questioned whether artificial intelligence stocks can justify their lofty price tags. The S&P 500 closed essentially flat after briefly testing its 50-day moving average, while the Nasdaq managed a modest 0.1% gain. The Dow Jones Industrial Average fell 0.7%.
What started as relief over the end of a historic government shutdown quickly morphed into anxiety about what comes next. Federal Reserve officials have been throwing cold water on expectations for a December rate cut, with several expressing outright opposition. Markets have taken notice, investors now see less than a 50% chance of a rate reduction next month, a stark reversal from October when another cut was considered almost certain.
The tech sector remains under particular scrutiny. All eyes are on Nvidia’s earnings report on Wednesday, with options traders pricing in a 6.2% swing in either direction, the company’s highest implied move in a year. The results will serve as a crucial test for AI valuations, which have powered a torrid rally since April’s market meltdown.
Beyond tech, major retailers including Walmart and Target will report their results this week, offering crucial insights into consumer spending, the main engine of the American economy. However, investors will have to navigate a deluge of delayed economic data, including September’s jobs report, which was held up by the government shutdown.
Treasury yields climbed three basis points to 4.15% as traders dialled back their rate cut expectations. The dollar wavered, while Bitcoin tumbled below $US95,000 for the first time in about six months, now barely clinging to gains for the year after touching a record high above $US126,000 in early October.
Market breadth tells a concerning story. Despite the S&P 500 holding near recent highs, deteriorating breadth and sector rotation are emerging as warning signs. Defensive sectors like healthcare and consumer staples showed relative strength last week, suggesting investors are hedging their bets on the AI-driven rally.
Europe
European markets suffered their own bout of uncertainty on Friday, with the Stoxx 600 dropping 1.0% as concerns spread across the Atlantic. Semiconductor stocks bore the brunt of the selling after US chip-equipment maker Applied Materials delivered a tepid outlook.
However, not all news was gloomy. Siemens Energy defied the broader market malaise, surging 9.4% after substantially raising its mid-term financial targets on strong demand for gas turbines and data centre equipment. The company’s Gamesa wind turbine unit also showed restructuring progress, bolstering investor confidence.
Luxury goods provided another bright spot. Richemont climbed 5.9% as shoppers from the US to China snapped up the group’s pricey Cartier and Van Cleef & Arpels jewellery, with sales topping expectations across all divisions and regions.
UK markets faced additional headwinds as speculation about tax hikes ahead of the upcoming budget heightened uncertainty over the nation’s finances. The FTSE 100 fell 1.1%, with banks particularly hard hit. The sector’s 2.4% decline marked its worst day in months, led by UniCredit, Santander, and HSBC.
German insurer Allianz raised its full-year profit outlook after strong third-quarter earnings, driven by its property-casualty insurance and asset management businesses. Meanwhile, on the negative side, Jaguar Land Rover swung to a £559 million quarterly loss and slashed guidance after a cyberattack temporarily halted production.
Australia
Australian investors face a cautious start to the week, with ASX 200 futures pointing to a 17-point decline, extending Friday’s sharp sell-off that wiped $37 billion from the local market. Global markets are grappling with renewed uncertainty over US interest rate policy and questions about sky-high technology valuations, setting a nervous tone as we head into a data-heavy week.
The ASX 200 is set to extend Friday’s losses, with futures pointing to a 0.2% decline at the open. The local market wiped $37 billion off its value on Friday, dragging the benchmark to its lowest level since mid-July.
In corporate news, Elders reported stronger profit results, providing some positive momentum in the agricultural sector. FleetPartners announced the acquisition of salary packaging provider Remunerator for $31.4 million upfront, with potential deferred and contingent payments of up to $8.6 million tied to commercial outcomes through 2028 and the continuation of the federal electric car discount scheme.
The company reported revenue lifted 3.2% in the 2025 financial year to $786.23 million, while net profit fell 4.1% to $84.12 million in the 12 months to September 30. FleetPartners will fund the acquisition through existing cash and debt facilities, with the deal expected to be low single-digit earnings per share accretive before synergies.
Ramsay Health Care appointed former Santos chief commercial officer Anthony Neilson as group chief financial officer from 24 November, bringing over 30 years of experience from energy, resources, and infrastructure sectors.
JPMorgan Asset Management partnered with Betashares to launch two new managed portfolios on the Direct platform – the J.INC income portfolio and J.GROW growth portfolio – giving retail investors access to JPMorgan’s global multi-asset strategies for the first time.
BHP faces significant legal liability after a London judge ruled the company must compensate hundreds of thousands of victims of the devastating 2015 dam collapse in Brazil, potentially resulting in a multi-billion dollar payout a decade after the disaster.
Commodities and currencies
Brent crude rallied 2.2% to $US64.39 a barrel as fresh geopolitical threats disrupted supply. A major drone strike damaged an oil depot and vessel at Russia’s Black Sea port of Novorossiysk, which had been shipping about 700,000 barrels daily over the past two months. Ukraine also claimed a strike on Rosneft’s Saratov refinery in the Volga region.
Simultaneously, Iranian forces seized a tanker after it passed through the Strait of Hormuz, a critical chokepoint that handles about a fifth of global oil flows. The incident has fuelled concerns about merchant shipping safety in the region.
These disruptions come as US sanctions on Rosneft and Lukoil take effect within days, providing additional price support after Brent had fallen more than 16% this year on oversupply expectations.
Gold fell 2.2% to $US4,080.74 an ounce as investors reduced bets on near-term Fed rate cuts. Iron ore slipped 0.3% to $US102.50 a tonne.
The Australian dollar edged 0.1% higher to US65.36¢, showing relative resilience despite the uncertain global backdrop.
Economic Calendar
US:
- Empire Manufacturing Nov 00:30
- Construction Spending MoM Aug 02:00
This article was written by Calvin Curdie, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
