United States
Wall Street ended the week on a sour note on Friday as a toxic combination of an escalating Middle Eastern war, a surprisingly weak jobs report and jitters in the private credit space sent investors scrambling for safety.
The S&P 500 slid 1.3%, capping its worst week since October, while the Nasdaq 100 dropped 1.5% and the Dow Jones Industrial Average shed 0.9%. The selling was broad-based, though financial stocks bore the brunt after BlackRock tumbled 7.7% when it moved to curb withdrawals from one of its private credit funds.
The February non-farm payrolls report landed with a thud, revealing a 92,000 decline in employment, one of the sharpest drops since the pandemic. Unemployment ticked up to 4.4%, with job losses stretching across a wide range of industries. While some of the weakness could be attributed to temporary factors, including striking healthcare workers and adverse weather, the breadth of the decline caught markets off guard.
The grim labour market data has put the Federal Reserve in an uncomfortable position. Morgan Stanley Wealth Management noted that while significant job market deterioration would typically support rate cuts, the risk that surging oil prices could reignite inflation may keep policymakers on the sidelines. Fed Governor Christopher Waller played down the war’s lasting impact on inflation, though San Francisco Fed President Mary Daly acknowledged that labour market risks persist.
On the corporate front, chipmakers came under pressure after Oracle and OpenAI scrapped plans to expand an artificial intelligence data centre in Texas. Working in the opposite direction, Marvell Technology surged after issuing an upbeat sales outlook, pointing to data centre demand growing faster than expected. Boeing was also in the spotlight amid reports it is closing in on a 500-aircraft 737 Max order set to be unveiled during President Trump’s upcoming state visit to China.
Europe
European equities endured their worst week since the tariff turmoil of April last year, with the Stoxx 600 falling 1.0% on Friday alone, enough to wipe out all of the index’s year-to-date gains as the Iran conflict showed no sign of resolution.
Energy was the sole bright spot, gaining 0.8% as Brent crude breached US$90 a barrel for the first time in nearly two years. Equinor outpaced peers, climbing 3.1%, partly helped by its limited exposure to the Persian Gulf, while Galp and Repsol each added close to 3%.
Elsewhere it was a sea of red. Technology stocks dropped 2.0%, dragged lower by BE Semiconductor’s 17.1% plunge after reports that memory chipmakers are considering new standards that could delay demand for its bonding technology. Infineon fell 6.8% following a downgrade citing a challenging 2027 outlook, while ASM International shed 5.5%.
Healthcare suffered a 1.6% decline after Zealand Pharma collapsed 36.4% when its experimental obesity drug, developed in partnership with Roche, delivered underwhelming trial results. Banks fell 1.7%, with RBC Capital Markets suggesting the sector needs greater clarity on how the conflict will affect economic growth before it can recover. Automotive stocks dropped 1.8%, while media names fell 2.3%, weighed down by Universal Music Group’s 8.1% slide after it scrapped plans for a US listing.
Defence stocks within industrials provided some relative resilience, with Saab rallying 3.9% as the sector outperformed.
Australia
Australian shares are bracing for a bruising start to the week, with S&P/ASX 200 futures pointing to a drop of around 1.8% on Monday. The benchmark has already fallen 3.8% since the US and Israel began bombing Iranian targets just over a week ago, and the weekend brought little comfort for bulls.
President Trump took to social media on Saturday night (AEDT) to warn that Iran would face intensified strikes, while the UAE and Kuwait began cutting oil production as the near-closure of the Strait of Hormuz clogged regional supply chains. Kuwait declared force majeure on oil and refinery product sales, while Saudi Arabia has been diverting record volumes of crude to its Red Sea coast to bypass the strait.
Among stocks to watch, BHP’s American depositary receipts fell 4.3% on Friday, while Rio Tinto’s ADRs shed 3.9%. Santos looms as an interesting story after confirming it will keep 17% of its gas output uncontracted over the next five years, and following an upgrade to overweight by Jarden. Karoon Energy was also lifted to buy by Jarden, while Barrenjoey raised Charter Hall to overweight and Stockland to overweight, though it cut Scentre Group to neutral.
Westpac confirmed it will deregister from the US Securities and Exchange Commission in May, while SkyCity received notice of proceedings related to its online gaming operations. Australian household spending data showed a rebound, a complication for the Reserve Bank as it weighs the prospect of another rate hike.
Bond yields moved higher late last week, with the three-year rising 5.4 basis points to 4.36% and the ten-year adding 5.1 basis points to 4.80%.
Commodities and currencies
Oil dominated the headlines as the Middle Eastern conflict unleashed unprecedented disruption to global energy markets. West Texas Intermediate surged 12% on Friday alone to US$90.92 a barrel, recording its largest weekly percentage gain on record in data stretching back to the 1980s. Brent crude closed just shy of US$93, up nearly 30% for the week, its biggest weekly jump in six years. Regional benchmarks fared even worse: Abu Dhabi’s Murban crude settled at US$103, Oman futures hit US$107, and Shanghai crude futures closed at the equivalent of US$109.
Gold climbed 1.6% to US$5,164.30 an ounce, though the rally was tempered by broad US dollar strength, which offset the war premium.
The Australian dollar fell 1.3% to 69.81 US cents as the greenback firmed across the board. The euro was little changed at US$1.1615, while the Japanese yen eased 0.2% to 157.83 per dollar.
Cryptocurrencies were caught in the risk-off downdraft, with bitcoin tumbling 4.2% to US$68,147 and ethereum sliding 4.8% to US$1,980.
Economic Calendar
No Major Economic Announcements
This article was written by Calvin Curdie, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
