United States
Wall Street remained quiet overnight with cash equity and Treasury markets shut for the Labour Day public holiday, leaving futures to provide the lead. S&P 500 and Nasdaq 100 contracts inched 0.2 per cent higher, staging a modest rebound from last week’s technology-led selling. The calm belies what is shaping up to be a testing month for investors. Over the next three weeks, US markets will absorb critical updates on employment, inflation and, crucially, the Federal Reserve’s interest rate decision. September has historically been the weakest month for equities, and with benchmarks sitting near record highs, the stage is set for heightened sensitivity to economic data.
Market strategists note that the bar for the Fed to hold off cutting rates on 17 September is high. Futures markets are already pricing more than 140 basis points of easing through to the end of 2026 – levels typically seen only during recessions. Debate over the Fed’s independence, coupled with tariff tensions, adds further layers of risk. Yet not all analysts are sounding the alarm. Evercore ISI expects the S&P 500 to climb a further 20 per cent by end-2026, arguing that periodic setbacks should be seen as opportunities to add exposure.
Europe
European shares nudged higher to start the week, the Stoxx 600 rising 0.2 per cent. Defence stocks led the charge, with BAE Systems and Rheinmetall climbing strongly after reports that European capitals are drawing up detailed plans for potential post-conflict security deployments in Ukraine. Rolls Royce added further momentum, jumping 2.8 per cent on reports of funding talks for its reactor unit.
Sector performance was uneven. Autos outperformed as French car registrations lifted, helping Renault, BMW and Ferrari all notch gains. Industrials were supported by upgrades for VAT Group and Konecranes, while banks caught a bid after Nordea and SocGen were upgraded. Conversely, insurers struggled, with Zurich, Swiss Re and Allianz all weaker. Technology names were mixed – SAP and ASM International gained, but Amadeus slumped after a downgrade.
Political risk remains an undercurrent. France faces a confidence vote within a week, keeping pressure on sovereign spreads. Analysts warn that the gap between French and German yields could test 100 basis points, raising the risk of profit-taking in European banks. Even so, Goldman Sachs expects the Stoxx 600 to edge up to 560 by year-end, citing better growth prospects and light investor positioning.
Australia
The local market looks set for a softer open, with ASX 200 futures down seven points, or 0.1 per cent, at 8887. Yesterday the benchmark slipped 21 points to close at 8927.7. Today’s session will be shaped by domestic data, with June quarter current account and export figures due at 11.30am AEST.
In corporate news, Collins Foods reaffirmed its FY26 guidance after reporting a 6.7 per cent lift in sales for the first 18 weeks of the year. Stronger KFC momentum in both Australia and Europe underpinned the result, with management highlighting improved execution, product innovation and easing input costs as drivers of margin expansion. Shares are likely to be in focus as investors digest the update. Separately, Platinum Asset Management disclosed a $580 million client redemption ahead of its planned merger with L1 Capital, a sizeable 7.5 per cent of funds under management. Westpac was also in the headlines after flagging a 15 per cent jump in business lending over the year to June, prompting plans to expand its business banking workforce.
Commodities and currencies
Precious metals continued their ascent as expectations of US rate cuts drove demand for havens. Gold rose 0.8 per cent to US$3476.19 an ounce, edging towards record highs, while silver pushed through the US$40 mark for the first time since 2011.
Oil markets were steadier, with Brent crude up around 1 per cent to US$68.15 a barrel. Prices are being supported by renewed geopolitical tensions, including disruption risks to Russian exports and EU sanctions on Indian refineries. Iron ore fell 1.8 per cent to US$101.65 a tonne, continuing recent softness in bulk commodities.
Currency moves were modest. The Australian dollar gained 0.2 per cent to US65.52¢, helped by firmer metals prices. In digital assets, bitcoin advanced 0.6 per cent to US$109,126, though ether slipped 3.4 per cent to around US$4300.
Bond markets were little changed in holiday-thinned trade, with US 10-year yields steady at 4.23 per cent and Australian equivalents at 4.31 per cent.
Economic Calendar
US:
- S&P Global US Manufacturing PMI Aug 23:45
- ISM Manufacturing Aug 00:00
- Construction Spending MoM 00:00
AU:
- BoP Current Account Balance 2Q 11:30
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
