United States
Wall Street extended its record-breaking rally overnight as optimism over global trade deals gained momentum. The S&P 500 climbed 0.8% to reach fresh all-time highs, buoyed by reports of progress in trade negotiations between the US and European Union, following a confirmed deal with Japan. The Dow Jones Industrial Average led gains with a 1.1% rise, while the Nasdaq added 0.6%, supported by upbeat sentiment despite mixed earnings updates.
Investors responded positively to the news that both Washington and Brussels are working toward a 15% tariff agreement, mirroring the recently struck Japan-US pact. Treasury yields rose, with the 10-year climbing four basis points to 4.39%, signalling reduced demand for safe-haven assets. Meanwhile, the US dollar slipped, with the Bloomberg Dollar Spot Index down 0.2%.
Corporate earnings results were mixed. Alphabet reported stronger-than-expected revenue and announced a US$10 billion increase in 2025 capital expenditure, citing demand for cloud and AI services. In contrast, Tesla’s earnings disappointed, triggering renewed concerns about its long-term growth trajectory despite plans for a cheaper EV model.
Elsewhere, notable movements included strong results from AT&T and ServiceNow, while Texas Instruments weighed on the tech sector after raising concerns about short-lived demand spikes due to tariffs. Bond markets also began pricing in more aggressive rate cuts from the Federal Reserve next year, with expectations now reaching 75 basis points.
Europe
European markets surged on trade optimism, with the Stoxx Europe 600 Index gaining 1.1%—its best session since late June. Futures for the Euro Stoxx 50 rallied as much as 2.4% after reports that EU negotiators are close to agreeing on a 15% tariff structure with the US. Auto stocks, typically sensitive to trade developments, jumped 3.8% in regular trading. Healthcare and consumer goods also advanced, while utilities lagged.
Semiconductor shares underperformed, following caution from US peer Texas Instruments about the longevity of tariff-related demand boosts. German bond yields rose five basis points to 2.64% as risk appetite increased across the continent.
On the corporate front, UniCredit gained 3.6% after upgrading its full-year outlook, while SAP declined 4.1% after flagging elongated sales cycles in the industrial sector. Despite tariff concerns, most European earnings results have so far met expectations.
Australia
The Australian sharemarket closed higher on Wednesday, driven by strength in financials and miners. The S&P/ASX 200 rose 0.7%, or 60 points, to finish at 8734.20, just shy of Friday’s record high. Futures this morning point to a further 0.3% gain, with a 23-point rise to 8721, following improved global sentiment around trade.
Investor mood lifted after the US and Japan finalised a trade deal, with similar progress reported in negotiations with the EU. Industrial Relations Minister Amanda Rishworth’s confirmation that Australia will lift restrictions on US beef imports added to the upbeat tone.
Major banks staged a late-session rally. ANZ climbed 2.5%, Westpac rose 1.4%, and CBA rebounded 0.5% after recent underperformance. Iron ore producers extended gains, supported by robust demand expectations, despite a 0.7% dip in iron ore prices overnight. Fortescue gained 2.3%, Rio Tinto rose 1%, and BHP added 0.9%.
Energy stocks also advanced with oil prices holding near US$69 per barrel. Woodside gained 1.5% on stronger production figures, while Whitehaven Coal led the index, surging 6.5% amid China’s crackdown on coking coal overproduction.
In company news, Iluka Resources rose 4.1% after meeting full-year zircon production guidance. Ampol gained 3.3% after flagging resilient first-half earnings, while Insurance Australia Group rose 3.2% on an analyst upgrade. On the downside, Telix Pharmaceuticals fell sharply by 15.1% following a US SEC subpoena, and Paladin Energy dropped 11.3% after investors questioned its uranium production targets.
Locally, attention today will turn to a series of key earnings reports from Fortescue, Northern Star, and Lynas, along with speeches from RBA Governor Michele Bullock and the Macquarie Group AGM. Global PMI data and an ECB decision will round out the day’s economic agenda.
Commodities
Commodity prices were mixed. Gold fell 1.3% to US$3387.29 an ounce, reflecting the market’s reduced risk aversion. Brent crude edged 0.1% higher to US$68.68 a barrel, while West Texas Intermediate crude gained 0.2% to US$65.46. Iron ore declined 0.7% to US$104.75 a tonne.
The Australian dollar strengthened 0.7% overnight to US66.02¢, supported by rising global risk appetite and improved trade sentiment. Among cryptocurrencies, Bitcoin fell 1.4% to US$117,999, and Ether dropped 3.2% to US$3,589.98.
Economic Calendar
AU:
- PMI (Jul) 09:00
EU:
- PMI (Jul) 18:00
US:
- Jobless Claims 22:30
- PMI (Jul) 23:45
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
