United States
The S&P 500 finished the session barely changed, closing near 6,860 after spending much of the day oscillating without conviction. The Dow Jones Industrial Average was similarly subdued, while the Nasdaq 100 ended flat. It’s the kind of session that suggests markets are holding their breath rather than losing their nerve.
The standout performer was Meta Platforms, which jumped more than 3 per cent after reports emerged that Mark Zuckerberg is considering meaningful budget cuts to the company’s metaverse division. Given how much capital has been poured into that venture, any sign of fiscal discipline appears to be music to investors’ ears.
Small caps continued their recent run of form, with the Russell 2000 adding 0.8 per cent. Analysts are increasingly pointing to this segment as a potential beneficiary if the Fed delivers a rate cut next week, with looser financial conditions historically favouring the more cyclically oriented end of the market.
On the economic front, weekly jobless claims dropped to 191,000, their lowest level since 2022. The figure came in below all economist estimates, though the data captured the Thanksgiving period and tends to be volatile around holidays. The broader takeaway is that the US labour market remains resilient, even as some sectors announce layoffs.
One wrinkle worth noting: the November jobs report, originally scheduled for today, has been delayed until 16 December due to the recent government shutdown. That means Fed officials will be making their decision without the latest employment figures in hand.
Treasury yields edged higher, with the 10-year climbing four basis points to 4.10 per cent. Markets are still pricing in a December rate cut as near certain, though some Fed policymakers remain divided on whether to pause given sticky inflation readings.
Europe
European equities pushed higher overnight, buoyed by the same rate cut optimism driving sentiment in the US. The Stoxx 600 advanced 0.5 per cent, with the automotive sector leading the charge.
Bank of America struck a more positive tone on European carmakers, upgrading Mercedes-Benz, Renault and Porsche. That was enough to send the sector up 2.4 per cent, with Mercedes gaining nearly 5 per cent and BMW not far behind at 4.5 per cent. Stellantis added 4 per cent after reaffirming its guidance.
Industrials also had a solid session, rising 1.3 per cent. Schneider Electric climbed 3.5 per cent following an upgrade, while Atlas Copco gained ground after similar analyst enthusiasm.
Not everything was rosy, though. The chemicals sector slipped 0.4 per cent, weighed down by BASF, which fell 3.3 per cent after Oddo BHF flagged concerns the company would likely hit the lower end of its guidance range.
Healthcare was another laggard, with Philips tumbling 5.6 per cent after Citi warned of tariff challenges and China headwinds heading into next year.
Australia
The local market is set for a modestly higher open, with ASX 200 futures pointing to gains of around 29 points, or 0.3 per cent.
Rio Tinto will be in focus after new chief executive Simon Trott outlined plans to streamline the business, flagging potential asset sales of up to $15 billion while dialling back decarbonisation spending. It’s a significant strategic pivot that positions the miner more tightly around its core iron ore and copper operations.
In deal news, NextDC confirmed a memorandum of understanding with OpenAI to develop sovereign AI infrastructure at its Eastern Creek facility in Sydney. The partnership represents the ChatGPT-maker’s first major infrastructure commitment in Australia.
On the listings front, Saluda Medical began trading after raising $230.8 million in its IPO, valuing the neuromodulation company at approximately $775 million.
Domestic economic data continues to complicate the Reserve Bank’s outlook, with surging household spending prompting fresh bets on potential rate hikes rather than cuts.
Commodities and currencies
Oil prices firmed overnight, with Brent crude rising 1.1 per cent to US$63.31 a barrel. ANZ pointed to fading prospects for a Russia-Ukraine peace deal as the key driver, with supply disruption risks remaining elevated.
Gold continued its march higher, trading near six-week highs around US$4,208 an ounce. Expectations of Fed rate cuts and a softer US dollar are providing ongoing support.
Copper retreated modestly after its recent record-breaking run, with some traders questioning whether the rally had run too far too fast. Rio Tinto’s upgraded production guidance for its Mongolian operations added to the bearish pressure.
Bitcoin slipped below US$93,000, facing resistance around the US$98,000-$100,000 zone that analysts say will determine whether the year-end rally has legs.
The Australian dollar edged up 0.3 per cent to US66.19 cents.
Economic Calendar
US:
- Personal Income Sep 02:00
- Personal Spending Sep 02:00
- Uni of Michigan Sentiment 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.
