United States
Oil prices declined on Monday following reports that Iran had approached regional allies to urge the U.S. to broker an immediate ceasefire with Israel. It was suggested that Iran may offer flexibility on its nuclear stance in exchange for halting hostilities. This development helped U.S. equity indexes recover some of Friday’s losses.
The S&P 500 gained 0.94%, rising 56 points to close at 6,033, with seven of its sectors ending in positive territory—led by technology and communication services. The Nasdaq Composite climbed 1.52% to finish at 19,701, while the Dow Jones rose 0.75% (up 317 points) to 42,515.
Investor optimism around the potential ceasefire and reduced geopolitical risks prompted a modest return to risk assets, though gains across major stocks remained measured. Meta Platforms advanced 2.90% after announcing plans to introduce advertisements in its WhatsApp updates tab. The new revenue stream will employ broad targeting based on channels followed and user location but will not interfere with personal messages or conversations. Alphabet (Google) added 1.17% to close at $177.94, supported by broker upgrades in the communication services sector.
Semiconductor stocks rallied, driven by upbeat analyst commentary on Advanced Micro Devices (AMD) following a call on Friday suggesting a rebound in the chip sector and optimism surrounding new products. AMD led the gains, surging 8.81%, while Nvidia rose 1.92%, ending the session at $144.69.
Banks also rebounded, recovering most of Friday’s losses—Citigroup rose 2.24% and JP Morgan gained 2.04%.
U.S. Steel jumped 5.10% after former President Trump signed an executive order on Friday approving its merger with Japan’s Nippon Steel, ending prolonged negotiations. The agreement includes a so-called “golden share” for the U.S. government, though the specific rights attached to that share remain unspecified.
On the economic front, the New York Federal Reserve’s Manufacturing Survey came in at -16, representing the percentage difference between firms reporting expansion and those contracting. The figure marked a further decline from May and fell short of market expectations.
Bond yields edged higher, with the 10-year Treasury yield rising 5 basis points to 4.45%, and the 30-year yield climbing to 4.96%, approaching the headline grabbing 5% mark once again.
Europe
European shares rose on Monday, buoyed by easing concerns over the Middle East conflict. The Euro Stoxx 600 gained 0.36% to close at 546.91, marking its first advance in five trading sessions. The rally was primarily driven by gains in the banking sector. In the UK, the FTSE 100 added 0.28% to finish at 8,875.22.
Luxury goods stocks outperformed, with Kering, the parent company of Gucci, surging 11.76% after announcing it would appoint Renault’s current CEO as its new chief executive. In contrast, Renault shares dropped 8.69% on news of the departure of the highly regarded executive.
Better-than-expected Chinese retail sales data released on Monday also supported sentiment, with year-on-year growth coming in at 6.4%, an improvement on April’s 5.1% gain. This lifted other consumer and luxury-related stocks across the region.
Bank stocks rallied, with the European banking sub-index rising 2%. Banco Santander climbed 3.92%, reaching its highest level since 2014, while BNP Paribas advanced 3.44%. In Ireland, AIB rose 1.08% after the Irish Government announced the sale of its remaining stake in the bank. The government had effectively nationalised the banking sector over 15 years ago following a property-driven financial crisis.
Bond yields edged lower, with German 10-year bunds slipping 1 basis point to 2.52%, and UK gilts of the same maturity down 2 basis points to 4.53%.
Over the weekend, ECB President Christine Lagarde commented that inflation in the Eurozone is approaching target levels. On Monday, further ECB officials echoed that sentiment, suggesting the central bank has learned from its ultra-loose monetary policy in the early 2020s and will now be more mindful of its side effects.
Australia
The Australian share market was flat to start the week, as geopolitical tensions remained heightened. By the close of trade, the ASX 200 edged up just 1 point to finish at 8,548.40, with six sectors closing lower and five ending higher. Energy led the gains, while consumer staples was the worst-performing sector.
Despite the index finishing relatively unchanged, there were significant moves at the stock level. The energy sector surged after Santos received a takeover bid from the Abu Dhabi National Oil Company (ADNOC) and US private equity firm Carlyle, offering US$5.76 per share — equivalent to A$8.89 at the current exchange rate. The all-cash proposal is subject to Foreign Investment Review Board (FIRB) approval and ultimately the sign-off from Treasurer Jim Chalmers. Shares in Santos jumped 10.92%, rising 76 cents to close at $7.72, although investors remain cautious given the regulatory hurdles ahead. Woodside also rose, gaining 2.98% to $25.96, supported by a modest 0.5% rise in oil prices.
Uranium stocks were standout performers, following news that the Sprott Physical Uranium Trust secured a US$100 million financing deal to purchase physical uranium. Paladin shares surged 15.56% to $7.28, while Deep Yellow soared 21.24% to $1.57.
In contrast, gold miners fell as gold prices steadied and brokers downgraded select names, prompting a wave of profit-taking. Northern Star tumbled 8.21% to $20.68, and Evolution Mining dropped 8.04% to $8.46.Lynas Rare Earths continued its recent volatility, rising 3.11% to $9.28.
Healthcare stocks also gained, with Cochlear rising 4.91% to $286.24, despite the company issuing a profit guidance downgrade last Thursday that had rattled investors. Fisher & Paykel Healthcare added 2.33% to $34.71.
In the financial sector, the major banks saw only minor moves. However, ASX Ltd fell sharply, down 6.71% to $67.89 after ASIC announced an investigation into its governance and risk management practices, citing “repeated and serious” failures. The regulator voiced concerns over the ASX’s ability to ensure the stability and security of Australia’s financial market infrastructure, noting that progress on reforms had not been “fast enough.”
Bond yields tracked global markets higher, with the 10-year Australian government bond yield rising 8 basis points to 4.23%.
In overnight trading the ASX200 futures advanced 5 points indicating a small gain of 0.06%, drops in commodity prices held back any further advances. The AUDUSD was stable at 0.6522
Commodities
Oil prices fell on Monday amid reports that diplomatic efforts were underway to broker a ceasefire between Israel and Iran, easing fears of an escalating regional conflict. Traders were encouraged by the suggestion that a worst-case scenario might be avoided. West Texas Intermediate (WTI) crude dropped US$1.21, or 1.61%, to US$71.77, while Brent crude fell 1.89% to US$72.83.
Adding to the decline was the observation that major oil infrastructure remained intact, despite some smaller facilities being hit. However, concerns persist over the free movement of oil tankers through the Strait of Hormuz, a key shipping route for oil exports from nations not directly involved in the conflict.
Gold also retreated as safe-haven demand softened, with the price falling 1.37% (US$47.11) to US$3,385. Silver was flat, holding at US$36.30.
In contrast, Bitcoin surged 3.53% to US$108,466, and Ethereum jumped 5.7%, following reports that Trump Media had filed with the SEC to launch a Truth Social ETF tied to both Bitcoin and Ethereum.
Iron ore prices edged lower, falling 0.53% to US$93.50, after China’s industrial production data showed a year-on-year increase of 5.8% in May, down from 6.1% in April and below analyst expectations. Meanwhile, copper prices rose 0.60%, closing at US$9,703 per tonne on the London Metal Exchange.
Economic Calendar
EU:
- ZEW Economic Sentiment Index (Jun) – 7:00pm
US:
- Retail Sales (May) – 10:30pm
- Industrial Production (May) – 11:15pm
- NAHB Housing Market Index (Jun) – 12:00am
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
