United States
Wall Street continued its rally overnight, with all four major benchmarks — the S&P 500, Nasdaq 100, Dow Jones Industrial Average, and Russell 2000 — closing at fresh record highs for the first time since November 2021. The gains were spearheaded by technology stocks after Nvidia unveiled a US$5 billion investment in Intel, sending Intel’s shares surging 23 per cent. Nvidia also climbed 3.5 per cent, reinforcing confidence in the sector’s outlook.
FedEx provided an additional boost by reinstating its full-year profit outlook, a sign of improving clarity on demand trends, particularly ahead of the holiday season. The tech-led rally aligned with broader investor sentiment that has turned increasingly bullish since the Federal Reserve’s quarter-point rate cut earlier in the week. The Fed signalled two more cuts are likely before year-end, while fresh labour market data showed jobless claims dropping by the most in nearly four years, underscoring economic resilience.
US Treasuries edged lower, with the 10-year yield climbing two basis points to 4.10 per cent. The dollar firmed for a second session, while the VIX index of implied equity volatility remained steady at 15.7. Commodities eased, with gold slipping 0.4 per cent to US$3644 an ounce and Brent crude retreating 0.6 per cent to US$67.52 a barrel.
Europe
European markets tracked Wall Street higher, buoyed by the Fed’s rate cut and strength across growth-oriented sectors. The Stoxx 600 rose 0.8 per cent, with technology delivering its strongest day since April. Semiconductor stocks led the advance, powered by Nvidia’s investment in Intel, which investors viewed as a positive signal for sector capital spending.
ASML jumped 7.7 per cent, SAP gained 5.4 per cent, and Capgemini advanced 3.2 per cent, anchoring the tech rally. Industrials also contributed, with Schneider Electric and Siemens up strongly on electrification growth themes. Financials outperformed, with private equity giant EQT climbing 3.7 per cent and 3i Group adding 2 per cent.
Not all sectors shared in the gains. Chemicals ended the session at a six-week low, dragged down by Evonik’s 3.1 per cent drop to a record low and BASF’s 1.2 per cent decline following a rating downgrade. SIG Group was the day’s biggest loser across the index, plunging more than 24 per cent after pausing its dividend and issuing a profit warning.
Banks were mixed, with Deutsche Bank and Handelsbanken weaker, while Commerzbank and Santander posted solid gains. Retail saw a notable move from Zalando, which surged 5.3 per cent after a Danish billionaire disclosed a €9.7 million share purchase. Meanwhile, Novo Nordisk rallied 6.2 per cent after data showed its blockbuster Ozempic drug outperformed Eli Lilly’s Trulicity in a real-world survey.
Australia
Local shares are set to open higher, with ASX 200 futures pointing to a 0.5 per cent rise at the open, tracking global optimism. The positive lead follows the US rally and expectations of continued Fed easing, alongside resilient global growth signals.
On the corporate front, Santos remains in focus after revelations that a methane leak helped derail its US$19 billion takeover negotiations. In broker moves, Citi upgraded Pro Medicus to “buy” and initiated coverage on ResMed with a new buy rating and price target of A$330. Netwealth was also lifted to “overweight” at Jarden Securities, while Cochlear was downgraded to “neutral” at Citi.
Australian investors will also be digesting Reserve Bank modelling, which showed a sharp downgrade to the estimate of the neutral rate — the level seen as neither stimulatory nor restrictive. Bond yields eased in response, with the three-year yield falling 3.4 basis points to 3.38 per cent and the 10-year yield down 2.9 basis points to 4.19 per cent.
Among offshore-linked plays, BHP and Rio Tinto’s US-traded ADRs declined overnight, pointing to potential early weakness for the local resources sector. BHP’s ADRs fell 1.9 per cent to trade at a discount to Sydney prices, while Rio slipped 1.6 per cent.
Commodities and currencies
The commodity complex was broadly weaker. Iron ore futures edged lower, pressured by sluggish Chinese demand, though restocking ahead of the upcoming National Day holidays helped limit declines. Singapore iron ore futures slipped 0.19 per cent to US$105.25 a tonne, while coking coal and coke fell more than 1 per cent on the Dalian exchange.
Gold fell for a second straight session, while oil prices pulled back as geopolitical commentary out of Washington suggested the US may prioritise lower crude prices over sanctions pressure on Russia.
In currency markets, the US dollar strengthened, with the Bloomberg Dollar Spot Index up 0.4 per cent. The Australian dollar was weaker, down 0.6 per cent to US66.12¢, while the New Zealand dollar dropped a sharper 1.4 per cent to US58.82¢. The euro held steady near US$1.18, and the yen hovered at 147.94 per dollar ahead of today’s Bank of Japan meeting, where policymakers are expected to keep rates on hold but leave the door open to a future hike.
Bitcoin dipped 0.3 per cent to US$117,263, while Ether shed 0.4 per cent to US$4590.
This article was written by James Woods, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
