United States
Wall Street ended the week on a strong note, with major indices hitting record highs as cooling inflation data reinforced confidence that the US Federal Reserve will cut interest rates this week. The S&P 500 rose 0.8 per cent, briefly surpassing 6,800 points, while the Dow Jones gained 1 per cent and the Nasdaq 100 added 1 per cent, extending October’s rally.
The September core consumer price index rose 0.2 per cent from August and 3 per cent year-on-year, the slowest pace in three months. The figures offered reassurance that inflation pressures are easing even as the labour market shows signs of softening. Traders have now fully priced in a 25-basis-point cut at this week’s Fed meeting, with another cut expected in December.
The US 10-year Treasury yield held steady at 4 per cent, while the 2-year yield slipped one basis point to 3.48 per cent. The US dollar was little changed as investors digested the implications of a slower inflation trend and the possibility of an earlier end to quantitative tightening. Traders now expect roughly 120 basis points of easing over the next 12 months, which would take policy rates below the 3 per cent neutral level.
Corporate earnings also added momentum. Procter & Gamble reported stronger-than-expected quarterly sales as consumers absorbed price increases, while Ford Motor surged after signalling a rebound next year from supply disruptions. General Motors advanced after raising its full-year profit guidance, and Newmont climbed on cost-cutting results while exploring a potential deal for Barrick Gold’s Nevada assets.
Europe
European shares finished the week higher, buoyed by the softer US inflation print and strong corporate results. The Stoxx 600 gained 0.2 per cent, marking its best week since June. UK equities continued to outperform euro-area peers, led by financials and industrials.
NatWest Group surged nearly 5 per cent to a 15-year high after posting a quarterly earnings beat and lifting its outlook, helping drive the SX7P Banks Index higher. Financial stocks overall logged their strongest weekly performance since mid-year. The London Stock Exchange Group also jumped 4.8 per cent, while Investor AB and 3i Group closed at record levels.
In the industrial space, Saab rallied 6 per cent after boosting sales guidance, and Rolls-Royce rose 1.1 per cent. Siemens and Schneider Electric both advanced as industrials enjoyed their best week since June. The SXNP Industrials Index climbed 0.7 per cent.
Luxury goods were mixed, with Kering down almost 4 per cent after a downgrade from HSBC, while LVMH slipped 1.3 per cent. The sector lagged after a recent rebound prompted profit-taking.
Among resources, the SXPP Basic Resources Index rose 0.2 per cent as copper hovered just below US$11,000 a tonne, close to last year’s record, supported by ongoing supply disruptions. Rio Tinto gained 0.5 per cent, while Norsk Hydro dropped 3.5 per cent following disappointing results.
Energy names also advanced, with Siemens Energy up 5 per cent and Eni gaining 1.8 per cent as crude oil steadied following US sanctions on Russian producers. The SXEP Energy Index added 0.5 per cent, reflecting a firmer tone across the sector.
Australia
The ASX 200 is poised to open higher on Monday, with futures up 0.3 per cent to 9,061, following Wall Street’s rally and expectations of imminent US rate cuts. The positive momentum comes ahead of a key domestic inflation print this Wednesday, which will be the final major data release before next week’s Reserve Bank of Australia board meeting.
RBA Governor Michele Bullock is scheduled to speak this evening, marking her last public appearance before the meeting. Markets are watching closely for any guidance on the RBA’s stance amid fading disinflation and signs of labour market weakness. Bond yields in Australia edged higher on Friday, with the 10-year yield at 4.14 per cent and the 3-year yield at 3.37 per cent.
In company news, Rio Tinto remains in focus after multiple board members stepped down last week, while ADRs in New York ended slightly lower at a discount to Sydney trading. WiseTech Global saw share sales by its chair’s holding entity, while Westpac made headlines as a court fined mortgage servicer RAM for compliance failings.
Broker moves were active, with Qantas upgraded to Outperform by Macquarie with a price target of A$12.29, while Pilbara Minerals was downgraded to Neutral at Jarden. Qualitas and Mayfield Group received new Buy ratings from Canaccord and Bell Potter, respectively.
On the macro front, the government unveiled new initiatives including an environmental watchdog proposal, an expanded cyber security program for the Indo-Pacific, and ongoing reforms to copyright laws to address artificial intelligence developments.
Commodities and currencies
Commodity markets were steady, with gold easing 0.3 per cent to US$4,113.05 an ounce after snapping a nine-week rally. The metal remains sensitive to expectations for monetary easing, as lower interest rates typically enhance its appeal. Copper traded near US$10,962 a tonne, supported by supply disruptions at key mines such as Freeport’s Grasberg pit in Indonesia.
Brent crude settled just below US$66 a barrel, little changed on the session, as traders weighed the impact of sanctions on Russian producers against concerns over global demand. West Texas Intermediate eased 0.6 per cent to US$61.45.
In currency markets, the Australian dollar strengthened 0.5 per cent to US65.44¢, while the New Zealand dollar gained a similar margin to US57.80¢. The euro was modestly higher at US$1.1633, and the yen slipped 0.2 per cent to ¥152.80 per dollar. Bitcoin rose 1.3 per cent to US$110,945, while Ether advanced 2.8 per cent to US$3,936, continuing their recent momentum.
Economic Calendar
US:
- Durable Goods Orders Sep Preliminary 23:30
This article was written by James Woods, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
