United States
Following buoyant markets after the U.S. presidential election, the U.S. markets moved modestly higher on Thursday, led by gains in technology stocks. The Federal Reserve cut interest rates by 25 basis points to 4.50%, as widely anticipated, noting a general easing in the job market and a continued move toward the 2% inflation target. Equity markets edged up after the announcement.
The Nasdaq Composite rose 1.57%, gaining 297 points to be at 19,282.96. The Dow remained nearly unchanged with a slight 0.13% increase, adding 57.15 points to 43,787.08 in late trading on Thursday. The S&P 500 advanced 0.87% to reach a new high of 5,9803.35, adding 51.31 points. Only three sectors declined, with financials taking the largest hit as traders took profits after a strong performance on Wednesday. Technology and communication services were the top performers.
Tesla continued its upward momentum, bolstered by expectations of favourable policies due to CEO Elon Musk’s close relationship with President-elect Trump. Tesla shares rose 3.16% to $297.60, gaining $9.07. Speculation that the new administration may drop antitrust proceedings against Google lifted Alphabet’s shares by 2.28% to $182.38, up by $4.05. Meta gained 3.73% to $593.21, while Apple advanced 2.17% to $227.56, adding $4.89. Market analysts remain concerned that Apple could be impacted by potential tariffs on Chinese imports, as both iPhones and Mac computers are manufactured in China. Reports indicate Apple has been exploring production options in India as an alternative.
Warner Bros. Discovery, the global media giant, surged 12.35% after announcing stronger-than-expected third-quarter results, driven by subscriber growth on its streaming platform, MAX, which now boasts over 110 million subscribers. Competitor Netflix also added 1.98% for the day.
Retailers Costco and Walmart both saw gains, with Costco up 1.81% to $914.41 and Walmart rising 1.05%. Costco’s October sales report, however, came in slightly below analyst expectations.
Profit-taking led to a 4.35% decline in JP Morgan after analysts issued a sell recommendation. Goldman Sachs also dipped, down 1.82%, reflecting a softer day for the banking sector.
U.S. bond yields eased after a significant rise on Wednesday. The yield on the 10-year Treasury fell by 12 basis points to 4.31%, while the 2-year yield dropped by 6.5 basis points to 4.20%. The U.S. dollar also trimmed its recent gains, with the index falling 0.70% to 104.34
Note: Due to recent clock changes in the U.S. over the weekend, all U.S. market prices are as of 7:30 a.m. Sydney time (3:30 p.m. NY).
Europe
European markets advanced on Thursday, with the Euro Stoxx 600 rising 0.62%, up 3.14 points to 509.92. Technology stocks led gains as seven sectors closed higher, while only four finished lower. Germany’s DAX climbed 1.70%, gaining 323 points to reach 19,362, driven by political developments as Chancellor Scholz dissolved the current three-party coalition, advancing next year’s elections to March. Market sentiment improved with hopes that a new government could stimulate the German economy. In Paris, the CAC rose by 56 points to 7,425.60, a 0.76% increase.
In contrast, UK markets declined, with the FTSE 100 dropping 25.94 points to close at 8,140.74, down 0.32%. The Bank of England lowered interest rates by 25 basis points as expected, though its commentary suggested higher inflation and growth following last week’s new Labour government budget. The bank projected that measures introduced by Chancellor Reeves would add 0.5% to inflation, extending the time needed to reach the 2% inflation target by an additional year.
Europe’s materials sector saw a rebound as commodities recovered, with steelmaker ArcelorMittal surging 6.4% after reporting third-quarter profits that exceeded expectations. Positive Chinese trade data also supported the sector. Glencore rose 3.5% to 415.40 British pounds. Defence and aerospace stocks gained as well, with German arms producer Rheinmetall up 9.28% to 541.80 euros, driven by expectations of increased defence spending from a potential new German government and the U.S. administration. German automakers Mercedes and BMW also recovered, rising 2.8% and 2.9%, respectively. Daimler Trucks reported better-than-expected results and reaffirmed its annual guidance, boosting its shares by 2.92%.
German bond yields rose, with the 10-year bund adding 4 basis points to 2.44%, and the 2-year increasing by 3.5 basis points to 2.205%. Bonds across other continental European countries also edged up, though to a lesser extent, narrowing the spread between them. In the UK, bond yields fell, with the 2-year yield down 7 basis points to 4.43%, and the 10-year yield dropping 7 basis points to 4.49%. European currencies strengthened against the dollar, with the euro up 0.55% to 1.079 and the pound gaining 0.70% to 1.2968.
Australia
The ASX200 had a strong evening with the futures moving higher by 88 points to add 1.06%. The AUDUSD also advanced now trading at 0.6682. Gains in metal prices overnight has seen BHP push higher by 0.65% to be trading at the equivalent of A$43.27
The Australian share market gained 0.33%, closing higher by 26.8 points at 8,226.30. This modest rise, with five sectors advancing and six declining, masked significant movements within individual stocks. Investors were actively repositioning, favoring companies they believed would benefit from potential policy changes under the new Trump administration while moving out of those expected to be disadvantaged.
The energy sector led gains, with Woodside up by 3.24%, or 76 cents, to close at $24.25, and Santos rising 2.41%, gaining 16 cents to finish at $6.80. Although oil prices saw a slight uptick, the primary driver was optimism over anticipated policy shifts in the U.S.
In the materials sector, overall advances were modest, but underlying movements were substantial. Iron ore miners surged following the release of Chinese trade data showing higher exports, as companies aimed to pre-empt U.S. tariffs. More importantly, iron ore imports stayed robust, with steel margins improving due to existing stimulus measures, lifting iron ore prices by 0.69% to US$104.65. Fortescue climbed 3.28% to $19.50, while Rio Tinto rose 1.91% to $121.66. BlueScope Steel posted the biggest sector gain, jumping 5.52% to $22.93.
Gold stocks faced significant declines due to overnight drops in gold prices. Northern Star Resources fell 6.3% to $16.50, losing $1.11, Newmont slipped 4.25% to $66.41, and Regis Resources dropped 4.98% to $2.48 after a 13-cent decrease. Regis announced it had initiated legal proceedings against the federal government, challenging the cultural heritage protection order that halted a $1 billion project in New South Wales.
The banking sector was mixed. NAB reported full-year earnings of $7.1 billion, aligned with expectations and supported by its business banking unit. However, it noted deteriorating asset quality and accelerating arrears, the fastest in five years. NAB raised its dividend by one cent to 85 cents. Shares initially fell by 3.4% before recovering, closing up 8 cents at $39.33. Westpac, which went ex-dividend on Thursday with a 76-cent dividend, closed down 75 cents at $31.51, effectively unchanged after accounting for the dividend. CBA continued its upward trend, rising $1.80, or 1.24%, to a record $147.26.
Real estate stocks dropped on inflation concerns and uncertainty about potential interest rate cuts. Goodman Group declined by 2.43% to $35.34, and GPT fell 4.31% to $4.44.
Sigma Healthcare surged 24.94% to close at $2.43 after the ACCC approved its merger with Chemist Warehouse, highlighting the perceived value of aligning with Australia’s largest pharmacy group.
Australian bond yields saw minimal changes, with the 10-year yield up half a basis point to 4.63% and the 2-year yield steady at 4.11%. Three-month bank bill futures increased by one basis point to 4.30%, just 0.12% below the current three-month BBSW at 4.42%, indicating that traders expect no rate cuts until April.
Commodities
Better-than-expected trade data from China released on Thursday showed strong iron ore imports, increased profit margins for steelmakers, and a rise in exports, leading to a rally in metals. The export growth was attributed to Chinese companies accelerating shipments to the U.S. ahead of potential tariffs. Optimism also grew for a stimulus boost from Beijing lawmakers, who are concluding their week-long congress today. Copper recouped most of Wednesday’s losses, gaining US$321 to trade at US$9,664 per tonne, up 3.4% on the LME. Iron ore futures in Singapore also rallied, closing at US$105.53, up by US$1.59 (+1.5%) for the December contract. The contract continued to rise in the U.S. session, trading at US$105.95, a further 0.40% increase in late New York trade.
Gold also moved higher, increasing 1.32% to US$2,694.79 with a gain of US$35.54. A weaker dollar and the announcement of a Federal Reserve rate cut contributed to increased buying activity. In other gold-related demand news, the Chinese central bank remained absent from the gold market, with no purchases recorded in October. Silver rose as well, trading at US$31.78 with a 161-cent gain (+1.95%). Bitcoin continued its advance, adding US$443 (+0.57%) to reach US$76,402.
Oil prices climbed during Thursday’s session. A weaker U.S. dollar and additional rig closures in the Gulf of Mexico due to the strengthening Hurricane Raphael pushed WTI up by 0.98% to US$72.39, gaining 69 cents in late trade. Brent crude rose 0.96% to US$75.67, up 74 cents. Approximately 22% of the Gulf of Mexico’s oil production, or nearly 400,000 barrels per day, has been halted, according to the U.S. Bureau of Safety and Environmental Enforcement.
Economic Calendar
China:
- Inflation (Oct) – 12:30am – Saturday
US:
- Michigan Consumer Sentiment (Nov) – 2:00am
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
