United States
Wall Street ended last week on a jittery note as a bleak US jobs report cast a long shadow over markets. The S&P 500, which had flirted with record highs earlier in the session, slipped 0.3% by the close, while the Dow Jones Industrial Average fell 0.5%. The tech-heavy Nasdaq managed to tread water, finishing flat. The catalyst was a soft non-farm payrolls print showing just 22,000 new jobs in August, well short of the 75,000 forecast and marking one of the weakest gains since the pandemic era. Adding to the gloom, revisions revealed employment actually shrank in June for the first time since 2020, while the unemployment rate ticked up to 4.3%.
Bond markets wasted no time in responding. Two-year Treasury yields fell to levels not seen since 2022, while the 10-year yield slipped seven basis points to 4.09%. Traders are now fully pricing a 25-basis-point cut from the Federal Reserve later this month, with a 10% chance of a double move. Some desks, including Barclays and Bank of America, are forecasting as many as three cuts before year-end. Commentary on Wall Street was split. Bulls argued that weaker jobs growth strengthens the case for easier policy and could underpin equities in the medium term. Bears countered that a deteriorating labour market risks undermining corporate earnings just as valuations remain elevated. “Hoping for a temporary cooling while ignoring the risks of a deeper downturn is a slippery slope,” warned analysts at eToro.
On the corporate front, headlines were just as busy. Nvidia retreated after news it may lose its US$4 trillion valuation milestone, while Tesla floated a staggering US$1 trillion pay package proposal for CEO Elon Musk. Apple, meanwhile, reported record sales in India ahead of its product launch this week.
Europe
European shares mirrored the late-session stumble on Wall Street, with the Stoxx 600 closing 0.2% lower after surrendering earlier gains. Investors initially welcomed the prospect of faster Fed easing, but sentiment soured as the reality of slowing US jobs growth hit home.
Sector performance told the story. Banks bore the brunt of selling, with UniCredit down 2.4% and Barclays off 2.5%. Energy names also lagged, with BP and Shell each losing more than 2% as oil prices weakened. On the brighter side, industrials and basic resources outperformed, helped by strength in Rio Tinto and ArcelorMittal, both up around 2%.
Stock-specific moves added colour. Sweden’s Hexagon jumped 7.4% after selling a unit to Cadence for €2.7 billion, while Denmark’s Orsted gained 3% as investors approved a major rights issue. By contrast, Swiss software maker Temenos tumbled 16% following the abrupt dismissal of its CEO. The European Central Bank meets later this week, with markets widely expecting no change. However, given faltering growth indicators across the bloc, speculation is building that another rate cut could be on the horizon.
Australia
Closer to home, the S&P/ASX 200 futures point to a soft open, down 0.2% or 15 points, after global markets wavered on the US jobs shock. Yet the local mood remains upbeat, with investors eyeing a potential record high later this week as global central banks edge toward easing.
Corporate news will keep traders busy. Santos is in the spotlight amid reports that Abu Dhabi’s Adnoc is considering a financing package north of US$10 billion for its deal with the Australian energy major. Lifestyle Communities has lodged an appeal over fee rulings, while Perenti joins the ASX 200 after the latest index reshuffle.
Today’s session also sees a swathe of companies trading ex-dividend, including AFG, AUB, and Super Retail Group. Around $723 million in dividends are expected to be paid out this week, adding further liquidity to the market. Investor flows remain a talking point. August data shows CSL, Pilbara Minerals, and Boss Energy were the most popular buys, while the big banks topped the sell lists. Notably, DroneShield has emerged as a millennial favourite, ranking as the fourth-largest stock bought by younger investors last month. The tilt toward defensive industrials and resources reflects a preference for diversification in a volatile environment.
Economic data will be thin locally, with consumer confidence and the NAB Business Survey due Tuesday. Globally, however, attention will turn to US inflation numbers later this week — a potential spoiler for the Fed’s easing narrative.
Commodities and currencies
Commodities had a dramatic session, led by gold, which surged to a record US$3,593.89 an ounce intraday before closing at US$3,586.69, up 1.2%. The precious metal has now risen 37% year-to-date, fuelled by central bank buying, geopolitical tension, and the hunt for safe havens.
Oil prices weakened as OPEC+ signalled output hikes from October, with Brent crude sliding 2.2% to US$65.50 a barrel. West Texas Intermediate dropped even further, down 2.3% to US$62.05.
Iron ore prices held firm, up 0.3% at US$105.15 a tonne, offering some support for local miners. Meanwhile, copper and other base metals were mixed as markets weighed slowing global demand against supply-side concerns.
Currency markets extended the recent rebound in the Australian dollar, which climbed 0.5% to US65.53¢. The local unit has now gained nearly 11% since its April low, when trade tensions spurred by Washington sent it tumbling. The euro also strengthened, up 0.6% to US$1.1718, while the yen gained 0.7% against the dollar.
Bitcoin was little changed, down 0.1% at US$110,229.1 in local trade but still comfortably above the US$110,000 mark. Other cryptocurrencies saw modest gains.
This article was written by James Woods, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
