United States
US equities extended their record-breaking rally overnight, driven once again by enthusiasm in the artificial intelligence sector. The S&P 500 rose 0.4%, marking its seventh consecutive session of gains, while the tech-heavy Nasdaq 100 advanced 0.8%. The Dow Jones Industrial Average edged 0.1% lower amid mild rotation away from industrials.
Advanced Micro Devices (AMD) led the charge, soaring 24% after announcing a major partnership with OpenAI to co-develop AI infrastructure, a deal analysts say could generate tens of billions of dollars in revenue. The announcement fuelled renewed optimism in the AI space, with chip-related shares across the board gaining momentum. Nvidia’s stock dipped slightly, but the broader semiconductor index still climbed nearly 3%.
On the corporate front, Micron Technology climbed after an analyst upgrade, while Boeing gained on plans to boost 737 Max production. Apple, however, faced scrutiny in France over its use of Siri recordings, and Verizon replaced its long-time CEO to revitalise its competitiveness.
In macro markets, the 10-year Treasury yield rose four basis points to 4.16%, while the US dollar strengthened 0.3%. Gold rallied 1.9% to USD 3,960.20 an ounce, edging closer to the psychological USD 4,000 mark, as traders priced in further rate cuts and hedged against political uncertainty.
Europe
European markets were broadly flat, with the Stoxx 600 finishing down 0.04%, weighed by sharp losses in France after Prime Minister Sébastien Lecornu resigned, reigniting concerns about political instability. French banking and luxury stocks dragged the index lower, with BNP Paribas and Société Générale sliding 3.2% and 4.2%, respectively. Luxury names LVMH and Hermès fell more than 2%, contributing heavily to sector declines.
Elsewhere, Mondi plummeted 16% after warning of a challenging outlook, which weighed on paper and packaging peers. In contrast, the tech sector was a bright spot, up 1%, led by BE Semiconductor, which surged 12.5% after confirming AMD is a key client in its new partnership with OpenAI. ASML added 2%, helping lift sentiment across European chipmakers.
Energy stocks gained 1.3% after OPEC+ agreed to a modest production increase, alleviating concerns of an oversupply shock. Major oil names such as BP and Shell advanced more than 1.5%. Meanwhile, insurers outperformed, with Munich Re and Swiss Re climbing over 3%, supported by higher payouts and optimism around premium growth.
Industrial stocks lagged, with Rheinmetall and Airbus retreating as the sector pulled back from recent highs. In basic resources, Rio Tinto and Glencore each added over 1%, supported by firmer gold and iron ore prices.
Australia
Australian shares are set to open higher, with futures pointing to a 10-point or 0.1% gain for the S&P/ASX 200, following Wall Street’s tech-led surge. The local benchmark closed flat at 8,981.40 on Monday as strength in materials was offset by weakness in healthcare.
DroneShield was the standout performer, jumping 10.7%, while Lynas and Iluka climbed 7.2% and 4.7%, respectively, as investors rotated into resource names on firmer commodity prices. In contrast, Mesoblast slumped 6.2%, leading healthcare laggards, with Pro Medicus down 3.1%.
Today, attention will turn to the Westpac Consumer Confidence report at 10:30am, which could offer further insight into domestic sentiment amid continued inflationary pressures.
Commodities and currencies
Gold continued its strong run, nearing USD 4,000 an ounce, driven by rising expectations of a US rate cut later this month and safe-haven demand surrounding a potential US government shutdown. The metal’s 50% year-to-date rally has been underpinned by renewed investor flows into gold-backed ETFs.
Brent crude rose 1.7% to USD 65.60 a barrel, supported by OPEC+’s restrained output hike and stronger demand expectations heading into the northern hemisphere winter.
In currency markets, the Australian dollar gained 0.2% to USD 0.6618, while the euro weakened 0.3% to USD 1.1711. The yen depreciated nearly 2% to JPY 150.33 per dollar, reflecting widening yield differentials and risk-on sentiment in global markets.
Bitcoin and Ether both surged, up 2.2% and 5%, respectively, continuing their rally as traders speculated on increasing institutional inflows into crypto markets.
Economic Calendar
AU:
- Westpac Consumer Confidence MoM Oct 10:30
US:
- Trade Balance Aug 23:30 *May be Impacted by US Gov Shutdown
This article was written by James Woods, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
