United States
Wall Street ended Tuesday lower after a noisy employment report failed to provide the clarity traders were seeking on the Fed’s path forward.
The S&P 500 fell 0.2 per cent for its third consecutive decline, while the Dow Jones Industrial Average dropped 0.6 per cent. The Nasdaq 100 bucked the trend, rising 0.3 per cent as most megacap tech stocks gained ground. Tesla was the standout, surging more than 3 per cent to close at a record US$490.30 after Elon Musk said the company has been testing driverless vehicles in Texas without occupants.
Nonfarm payrolls rose 64,000 in November after declining 105,000 in October amid a contraction in federal employment. The unemployment rate climbed to 4.6 per cent – the highest since 2021 – up from 4.4 per cent in September.
Treasury yields edged lower, with the 10-year rate falling two basis points to 4.15 per cent. Swap markets implied only a 20 per cent chance of a January rate cut, with a reduction not fully priced in until mid-2026. Traders continue to bet on two quarter-point cuts next year, one more than the Fed’s median forecast.
A separate report showed US retail sales were little changed in October as solid spending across several categories was muted by a decline at motor vehicle dealers.
In corporate news, Pfizer forecast little to no sales growth next year as the drugmaker works to rebuild its pipeline. Kraft Heinz named former Kellanova CEO Steve Cahillane as its new chief executive. Databricks is raising more than $US4 billion in a funding round valuing the software firm at $US134 billion.
Europe
European stocks fell as US jobs data confirmed the labour market is cooling and defence stocks tumbled on signs of progress in Ukraine peace negotiations.
The Stoxx 600 declined 0.5 per cent. Defence stocks were a major drag, with a Goldman Sachs basket of the sector dropping 3.3 per cent after President Donald Trump said a negotiated end to the war is “closer” than ever. US negotiators have offered Kyiv significant security guarantees. Rheinmetall fell 4.5 per cent, while Airbus dropped 1.6 per cent.
Energy stocks also suffered as the peace talk progress helped push Brent crude below US$60 per barrel for the first time since May. BP tumbled 3.4 per cent and Shell fell 2.3 per cent amid reports it has restarted efforts to sell its stake in the Schwedt refinery.
Financials outperformed, led by UBS which jumped 3.8 per cent after Bank of America analysts predicted the Swiss firm can grow earnings per share at the fastest sequential pace of any bank globally. IG Group soared 8.5 per cent to a record after accelerating its guidance.
Luxury names rose on continued optimism about Chinese consumption support, with LVMH gaining 1.7 per cent and Kering adding 1.9 per cent. Gucci owner Kering also confirmed it will receive $US690 million from the sale of a stake in a New York property to French investment fund Ardian.
The construction sector closed at an all-time high, while the travel sector hit its highest level in more than three months. Barry Callebaut jumped 5.8 per cent on reports it is exploring separating its cocoa unit.
Australia
The local market faces a flat open, with S&P/ASX 200 futures pointing to a marginal decline. Elders is scheduled to release full-year results, while Treasury Wine Estates will host an investor conference call.
South32 will be in focus after announcing it will shut the Mozal aluminium smelter in Mozambique from March, citing ongoing power supply challenges in the southern African nation.
Santos said the PNG LNG joint venture had fully repaid its project finance facility six months ahead of schedule. The company’s $US363 million share of the final scheduled June 2026 repayment was made in December, lowering future interest costs and improving liquidity flexibility. Santos now has about $US4 billion in liquidity and no scheduled debt maturities in 2026.
Woodside Energy received an extension on its Louisiana LNG project. The Australian communications regulator ACMA said it prefers to renew spectrum licences used by Telstra’s mobile networks.
Sandfire Resources said an updated pre-feasibility study confirmed the development potential of its fully permitted Black Butte copper project in Montana, outlining a mine producing about 35,000 tonnes of contained copper annually in the first four years.
PointsBet Holdings appointed Andrew Catterall as group chief executive, effective February 1. SGH has appointed John Gillam as chairman-elect from February.
Among rating changes, IGO and Liontown were both upgraded to overweight at JPMorgan, while ResMed was cut to neutral at Baird.
Two of Australia’s major banks now see the RBA hiking rates in February, adding to the hawkish narrative that has emerged since Governor Michele Bullock ruled out further easing.
Commodities and currencies
Oil extended its decline as signs of surplus and Ukraine peace talks weighed on prices. West Texas Intermediate crude tumbled 3 per cent to US$55.13 per barrel, while Brent dropped 2.7 per cent to US$58.91 – its lowest level since 2021.
Gold was little changed at US$4,309.65 per ounce, steadying after a five-day rally as traders digested the US jobs data. Iron ore rose 0.9 per cent to US$102.45 per tonne.
Copper edged lower as a risk-off mood took hold ahead of the data releases.
The Australian dollar was little changed at US66.35 cents. The euro held steady at US$1.1748, while the British pound rose 0.4 per cent to US$1.3424. The Japanese yen strengthened 0.3 per cent to 154.77 per dollar.
Bitcoin rebounded 1.9 per cent to around US$87,559, recovering some of its recent losses. Ethereum was little changed at US$2,943.
Economic Calendar
AU:
- Westpac Leading Index MoM 10:30
EU:
- CPI YoY 21:00
- CPI MoM 21:00
This article was written by Calvin Curdie, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
