United States
The concerns of last week were set aside as U.S. indexes rose in Monday’s trade. Both the Nasdaq and the S&P 500 gained 1.16%. The Nasdaq climbed 193.78 points to close at 16,884.61, while the S&P 500 added 62.6 points, reaching 5,471.05. The Dow saw a slightly larger increase, rising 1.20%, or 484 points, to close at 40,829.59. All sectors in the S&P 500 posted gains in a broad-based rebound. The best-performing sectors were Consumer Discretionary (+1.63%) and Industrials (+1.56%). Costco rose 2.26%, while Amazon climbed 2.34% to $175.40. The anticipated rate cut next week, and the consumer relief it could provide, were cited as key drivers of the rally.
In the Financial sector, JP Morgan saw gains of 2.05%, while Bank of America rose 1.83%. Nvidia rebounded sharply, rising 3.20% to $106.12. Apple unveiled its iPhone 16 with additional AI features on Monday, which the company hopes will slow the decline in iPhone sales. While Apple’s shares initially dipped, they ended the day unchanged at $220.67.
Stocks that were added to the S&P 500 index components for September saw significant gains following the announcement. Palantir, a software company specializing in counterterrorism investigations, saw its shares rise by 14% today.
Markets are now focused on the first presidential debate between Harris and Trump on Tuesday evening U.S. time, as well as the upcoming inflation data, with the August CPI due on Wednesday and the PPI on Thursday. These data points are expected to provide further insight into the size of the September rate cut. However, consensus is growing around a 25-basis point cut, as the likelihood of a larger cut continues to diminish. U.S. yields were little changed on Monday, with the 10-year U.S. Treasury at 3.70% and the 2-year note at 3.67%, an increase of 2 basis points. The U.S. dollar appreciated by 0.4%, reversing the declines from late last week.
Europe
European shares were higher, with the EURO Stoxx 600 rising 0.82% to close at 510.7, an increase of 4.14 points. All sectors, except for Real Estate, ended the day higher in a rebound following last week’s losses. The DAX gained 0.77% to reach 18,443.56, adding 141 points. The CAC 40 rose by 72 points, or 0.99%, to close at 7,425.26.
The UK market saw the biggest gain of the day, moving up 1.09%, or 89 points, to close at 8,270.84. This increase was led by gambling firm Entain, which rose 5.29% after announcing strong results from its online gaming division. Among the banks, HSBC gained 1.90%, contributing to a 1.44% rise in the Financials index on a day when all sectors of the FTSE advanced.
Investor sentiment fell for the third consecutive month, according to a survey conducted by Reuters, with sentiment particularly low in Germany. This week, the European Central Bank (ECB) is set to announce any changes to interest rates on Thursday, with the market anticipating a 25-basis point cut. In the UK, employment data will be released on Tuesday, and a private survey indicated a sharp decline in job placements over August. Yields on German and UK bonds were little changed in Monday’s trading.
Australia
Australian Index futures joined in the overnight rally moving 76 points higher to be up 0.97%. The AUDUSD was steady from Mondays close to be at 0.6660.
The ASX 200 closed lower on Monday, down by 25.3 points, or 0.3%, at 7,988.10. The market began the week with a loss of 1% but managed to recover some ground, supported by gains in the Real Estate (+0.87%) and Information Technology (+0.40%) sectors. These advances helped alleviate concerns stemming from a selloff in the US markets on Friday. Recovery in US and European index futures in Asian trade also helped. Despite this recovery, six out of the eleven sectors ended the day in negative territory, with the Energy and Consumer Discretionary sectors performing the worst.
In the Energy sector, Woodside fell by 23 cents (0.96%) to close at $23.79, and Santos dropped by 4 cents to $6.88, as oil prices stabilized at their lowest level in a year. However, Yancoal surged by 4.53% following news of its inclusion in the ASX 200 index during the quarterly rebalance in September. This development means that passive index funds tracking the ASX 200 will need to purchase a specified percentage of Yancoal shares. Guzman y Gomez also benefited from its addition to the ASX 200, rising 4.81% to a record high of $40.35, up $1.85.
In the Materials sector, BHP rose by 31 cents to finish at $38.76, while Fortescue increased by 8 cents, or 0.50%, to $16.20. Mineral Resources, on the other hand, fell by 25 cents to close at $30.40. Meanwhile, China Minmetals, a state-owned enterprise, announced a US$1.4 billion investment to produce lithium and potassium in China’s northwestern region.
The Real Estate sector saw gains across the board, with Stockland climbing 11 cents (2.16%) to $5.20 after revealing that it was in discussions with the Australian Competition and Consumer Commission (ACCC) about the divestment of properties in New South Wales. This proposed sale is aimed at alleviating competition concerns related to its purchase of 12 properties from Lendlease. Mirvac also performed well, rising by 1.85% to $2.20.
The Financials sector showed some resilience, recovering from earlier steep losses, but still ended the day 0.58% lower. All four major banks experienced minor declines. In the healthcare sector, CSL dropped by $2.58 to $300.41 after going ex-dividend with a US$1.45 (A$2.17) payout, which weighed down the sector despite gains in other healthcare stocks.
Steadfast emerged as the worst-performing stock of the day, plunging 39 cents (6.14%) to $5.96 before entering a trading halt shortly after the market opened. The decline followed a Four Corners report alleging that the company was involved in schemes to provide kickbacks on insurance fees to strata management companies, prompting concern from the ACCC. Steadfast currently underwrites 55% of Australia’s strata insurance policies.
In the bond market, Australian yields moved higher, with the 10-year yield increasing by 7 basis points to 3.95% and the 2-year yield rising by 5 basis points to 3.67%.
Commodities
Oil prices bounced higher from recent lows on Monday as a new hurricane began moving toward the Gulf of Mexico. Hurricane Francine is expected to reach the U.S. on Wednesday evening, prompting some companies to relocate staff and scale back drilling activities. West Texas Crude closed the session up by $0.98 to $68.67, a rise of 1.49%, while Brent Crude rose 1.06% to $71.81. The increase in prices began during Asian trading hours as traders saw buying opportunities following the significant declines of the past two weeks.
Similarly, iron ore attracted bargain hunters at the start of the new week. The commodity rose by $0.88 to $92.65, an increase of 0.95%, despite inflation data from China showing subdued consumer price pressures for August. This is yet another indicator of a continued slowdown in the Chinese economy. Copper also rose by $101.00 to close at $9,097 per tonne. Falling inventories in copper have led some to believe there could be greater demand soon.
Gold edged higher by 0.33% to trade at $2,504.78, an increase of $7.39, moving the precious metal back to the middle of its trading range from the past few weeks. Silver performed better, rising 1.42% or $0.40 to trade at $28.33. Bitcoin joined in the uptick, climbing $2,620 to reach $56,994, despite investors pulling $1.2 billion out of U.S.-listed Bitcoin ETFs last week.
Economic Calendar
AU:
- Consumer Confidence Indexes (Sep) – 10.30am
China:
- International Trade (Aug) – 1:00pm
US:
- NFIB Small Business Optimism Index (Aug) – 8:00pm
This article was written by James Woods, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
