United States
Wall Street closed out the week at fresh highs as optimism over further Federal Reserve easing continued to underpin sentiment. The S&P 500 advanced to around 6,650, led by megacap technology stocks, while the Nasdaq 100 and Dow each added between 0.3 and 0.4 per cent. The rally has been driven by expectations of multiple rate cuts into 2025, even as policymakers stressed a meeting-by-meeting approach.
Apple added to momentum, with its market capitalisation pushing above $US3.6 trillion as the latest iPhone models went on sale. Oracle rallied on reports of a $US20 billion cloud-computing deal with Meta, while FedEx reinstated its sales outlook, forecasting revenue growth of 4 to 6 per cent. The artificial intelligence trade remains central, with analysts at Bank of America arguing that the “Magnificent Seven” cohort still has upside despite a 223 per cent surge from the 2023 lows.
The bullish tone has been reinforced by earnings guidance. More than one in five S&P 500 companies offering third-quarter forecasts expect to beat consensus, the highest level in a year. Fewer firms are warning of weaker results, underscoring resilient corporate profitability. Still, strategists note the risks of a consolidation phase, with valuations stretched at 22 times forward earnings and volatility gauges near historic lows.
Treasury yields ticked higher, with the benchmark 10-year finishing at 4.14 per cent. The US dollar firmed against major peers, pushing the euro and pound lower, while the yen steadied. In digital assets, Bitcoin retreated nearly 2 per cent to $US115,483 and Ether dropped more than 3 per cent.
Europe
European equities ended the week on a softer note, the Stoxx 600 easing 0.2 per cent as investors looked ahead to economic data likely to shape the path of interest rates. Banks were broadly strong, with gains for continental names including HSBC, Santander and BBVA, but UK lenders underperformed. Lloyds, NatWest and Barclays all fell after Britain’s borrowing came in much higher than forecast, fuelling speculation of a potential bank levy.
Sector performance was uneven. Industrials dragged after a downgrade for Kuehne + Nagel, which slumped more than 9 per cent and weighed on peers across shipping and logistics. Aerospace and defence names outperformed, with Safran, Rolls-Royce and Saab climbing on project announcements and NATO-related contracts. Chemicals also held firm, supported by gains for Air Liquide and Brenntag.
By contrast, media shares were a significant drag, with WPP and Publicis tumbling on weak advertising sentiment. Technology stocks also eased, led by Infineon and SAP, as the sector pulled back from a two-month high. Energy shares fell alongside lower crude prices, with Shell, BP and TotalEnergies all retreating. Utilities provided a modest offset, helped by Iberdrola and E.On.
Bond markets reflected a cautious tone. Germany’s 10-year yield edged up to 2.75 per cent, while UK gilt yields climbed to 4.72 per cent. Investors remain alert to inflation data due this week that could clarify whether the European Central Bank has scope to begin easing before year-end.
Australia
The local market is set to start the week on the front foot, with SPI futures pointing to a 24-point rise in the S&P/ASX 200 to 8852. The expected bounce follows Wall Street’s record performance and renewed strength in key commodities.
Gold surged to near record levels, trading close to $US3,690 an ounce, while iron ore climbed above $US106 a tonne in Singapore. Both moves are expected to bolster local miners, particularly gold producers which have been under strong investor focus. The ASX has endured three consecutive weeks of declines, weighed by profit-taking after the August reporting season, and today’s session may provide a chance to regain momentum.
Investors will also be watching for Reserve Bank Governor Michele Bullock’s appearance before Parliament, though she is unlikely to provide explicit guidance ahead of the September 30 policy meeting. The central bank’s stance remains finely balanced as inflation moderates but remains above target.
Corporate news may influence sentiment. Lendlease is canvassing institutional investors to help fund a buyout of Hostplus from its $10 billion property fund, amid challenges to its long-standing role as manager. BHP is also in focus after reports that its infrastructure assets, spanning ports, railways and desalination plants, have attracted interest from Global Infrastructure Partners.
Elsewhere, The a2 Milk Company confirmed that a director sold $2.2 million worth of shares to meet tax obligations from recently vested performance rights. Morgans initiated coverage of Eroad with a “buy” rating, highlighting potential for margin expansion and improved earnings outcomes.
Commodities and currencies
Commodities provided a supportive backdrop to risk markets. Gold rose 1 per cent to $US3,682 an ounce, extending gains from the previous week and underscoring continued demand for safe-haven assets. Iron ore advanced 1.2 per cent to $US106.60 a tonne, reinforcing optimism for the major miners. However, Chinese state authorities have reportedly urged steel mills to temporarily halt purchases of BHP’s Jimblebar blend fines, highlighting Beijing’s effort to secure more favourable pricing in the global market.
Oil prices continued to ease, with Brent crude down 1.2 per cent to $US66.61 a barrel and West Texas Intermediate off 1.4 per cent to $US62.66. Concerns about oversupply outweighed potential risks to Russian flows, keeping pressure on energy equities.
In currencies, the Australian dollar slipped below US66¢, last trading around US65.9¢, as the US dollar strengthened broadly. The euro declined to $1.1748, sterling fell to $1.3473, and the yen held steady at ¥147.95. Bond yields remain firm, with Australia’s 10-year sitting at 4.25 per cent.
Economic Calendar
EU:
- Consumer Confidence Sep 00:00
US:
- Chicago Fed Nat Activity Index Aug 22:30
This article was written by James Woods, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
