United States
Wall Street advanced on Tuesday, extending recent gains as investors balanced political developments at the Federal Reserve with anticipation ahead of Nvidia’s results. The S&P 500 rose 0.4%, the Nasdaq 100 gained 0.4%, and the Dow added 0.3%, while the VIX slipped marginally to 14.62. Bond markets were calm, with the 10-year Treasury yield easing two basis points to 4.26%.
Defence stocks provided a strong tailwind after Commerce Secretary Howard Lutnick flagged potential government stakes in strategic sectors, following the earlier Intel deal. Boeing surged 3.5%, RTX climbed 2.1% to a record high, and GE Aerospace added 2.7%, leading the industrials sector higher. The broader industrials group gained 1%, outpacing the market.
Technology also played a central role in supporting sentiment. Semiconductors rose 1.1%, with Nvidia up 1.1% ahead of earnings due late Wednesday, while AMD gained 2% after an IBM partnership announcement. Broadcom added 1.3% on an analyst upgrade, though Intel slipped 0.8% and Microchip lost 1.4%. In hardware, Apple gained 0.9% after setting 9 September for its iPhone launch. Cisco rose 1.9%, while HP Inc. dropped 1.8%. Software names were more mixed, with Salesforce down 1.7% after a target cut and Adobe lower by 2.3%, contrasting with Palantir’s 2.4% advance.
Financials climbed 0.8%, driven by banks which gained 1.3%. JPMorgan, Bank of America and Wells Fargo each rose more than 1%. Goldman Sachs set a record high with a 1.4% gain, while Berkshire Hathaway added 1.2%. Health care was another standout, with Eli Lilly soaring 5.9% on progress towards approval for its weight-loss drug. Regeneron advanced 2.7%, offsetting losses in Johnson & Johnson and Pfizer.
Energy was the weakest sector, down 0.2% as oil prices retreated. Brent crude fell 2.2% to US$67.30 a barrel and WTI lost 2.3%, reflecting subdued supply signals and investor caution around geopolitical uncertainty.
Europe
European markets endured a broad retreat, with the Stoxx 600 down 0.8%, pressured by sharp losses in France amid mounting political risk. Investors worried the government could fall in a showdown over planned budget cuts, prompting a heavy sell-off across financials and construction. French banks led declines: BNP Paribas dropped 4.2%, SocGen slumped 6.8%, and UniCredit lost 3.2%. AXA fell 4% to weigh on insurers, while Allianz and Zurich slipped 1.7%. Construction stocks mirrored the weakness, with Vinci down 5.8% and Eiffage plunging 7.9% ahead of earnings due today. Elsewhere, Commerzbank shed 5% after a downgrade, while DNB Bank announced job cuts in its technology division. In contrast, Bunzl jumped 5.1% after resuming buybacks and reaffirming targets, while Rolls-Royce added 1.4% and Zurich Airport rose 2.3%.
Sector performance was mixed beyond financials. Utilities outperformed, led by Orsted’s 5.8% rebound as it reassured investors on its share sale plan, while E.On gained 1%. Technology stocks were relatively resilient, with ASML up 0.6% and BE Semiconductor gaining 1.3%. Basic resources fell only 0.2%, supported by a 3.1% rise in Fresnillo despite losses in Rio Tinto and ArcelorMittal. Consumer-facing sectors remained under pressure. Kingfisher sank 4.3% on a downgrade, dragging retail lower, while food stocks were hit as Diageo lost 2.9% and BAT declined 1.9% following a CFO departure. Luxury names were mixed, with Burberry climbing 3.2% but Richemont easing 0.6%. Health care slipped 0.7% as Novo Nordisk tumbled 4.5% after rival Eli Lilly’s drug news, although Bayer gained 1.7% and DiaSorin rose 4.7% on an upgrade.
Australia
The S&P/ASX 200 closed 31 points lower on Tuesday at 8,935.60, pressured by weakness in energy and consumer names. Futures, however, signal a firmer open today, with SPI contracts up 47 points or 0.5% to 8,942, supported by stronger US and semiconductor performance.
Attention will focus on a heavy day of earnings, with Nine Entertainment, Woolworths, WiseTech Global, Flight Centre, Adairs, Domino’s Pizza, Tabcorp, and Lovisa all reporting. Star Entertainment remains under pressure amid lender disputes over $430 million in debt waivers, while investors also watch developments with Salter Brothers’ frozen funds.
Key economic releases are also due at 11:30am AEST. July’s CPI indicator is expected to show an increase to 2.3% from 1.9%, driven by electricity base effects and strong travel demand around sporting events, according to NAB. Construction work done for the second quarter will also be closely scrutinised for signals on the broader economy.
Australian investors continue to monitor the implications of US political manoeuvring, with President Trump escalating efforts to remove Fed Governor Lisa Cook. The CME FedWatch tool places the probability of a September US rate cut at 88.3%, up from 83.7% the day before. Any sustained shift in Fed independence could have significant knock-on effects for global markets and local bond yields.
Commodities and Currencies
Commodity markets were mixed. Gold climbed 0.8% to US$3,393.57 an ounce, providing support to precious-metals miners, while iron ore fell 0.8% to US$102.40 a tonne. Copper eased 0.1% and steel dropped 0.6%, underscoring pressure on industrial metals. Energy was the weakest link, with oil extending losses as Brent slid to US$67.30 and WTI dropped 2.3%.
Currency markets reflected these moves. The Australian dollar gained 0.2% to US64.94¢, buoyed by higher gold prices and softer US yields. Bitcoin rose 1.6% to US$111,296, extending its recent rally. Bond yields showed relative calm, with the Australian 10-year at 4.31%, broadly in line with US rates.
Economic Calendar
AU:
- Westpac Leading MoM 10:30
- CPI YoY 11:30
US:
- MBA Mortgage Applications Aug 21:00
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
