United States
Wall Street extended its winning streak to three sessions, with the major indices posting solid gains as money markets priced in an 80 per cent probability of a quarter-point rate cut when the Fed meets next month. The Dow Jones Industrial Average led the charge with a 1.4 per cent advance, powered by strong performances from Merck, Home Depot and Nike. The broader S&P 500 climbed 0.9 per cent to close at 6,754.83, while the tech-heavy Nasdaq added 0.6 per cent despite earlier weakness.
The rally gained momentum after a string of economic releases painted a picture of moderating growth that could give the Fed room to ease policy. Private payrolls data showed a cooling labour market, retail sales rose only modestly in September, and consumer confidence dropped by the most in seven months. Perhaps most significantly, the benchmark 10-year Treasury yield briefly dipped below 4 per cent for the first time in recent sessions, settling at 4.00 per cent.
Adding fuel to the rate-cut narrative, Kevin Hassett emerged as the leading candidate to potentially succeed Jerome Powell as Fed chair next year. Hassett, who serves as White House National Economic Council director, has previously argued for more aggressive rate cuts, including a potential 50 basis point reduction.
The technology sector saw diverging fortunes as questions about AI infrastructure spending continue to swirl. Alphabet surged towards a $4 trillion valuation, extending its five-day gain to more than 11 per cent. However, Nvidia slipped 3 per cent after reports that Meta Platforms is considering billions in spending on Google’s AI chips, though portfolio managers remained sanguine about the chipmaker’s longer-term prospects.
Europe
European bourses caught a bid on reports that Ukraine had agreed to terms for a potential peace deal with Russia, lifting the Stoxx 600 by 0.9 per cent. The news provided particular support for sectors sensitive to geopolitical risk, with the UBS Ukraine Ceasefire basket jumping 2.2 per cent.
UK banks outperformed as concerns about potential tax increases in the upcoming budget eased, with Lloyds advancing 3.8 per cent. Dutch lender ABN Amro surged 6.5 per cent after its new chief executive outlined plans to boost profitability through job cuts and operational improvements.
The retail sector found support from Kingfisher, which rallied 6 per cent after raising its guidance. Meanwhile, pharmaceutical giant Novo Nordisk climbed 4.5 per cent on positive headline results from trials of its next-generation diabetes treatment.
Construction materials companies posted the best daily gain since June, with Heidelberg Materials soaring 6.6 per cent to a record close. The broad-based rally saw 17 of 20 major sector groups finish in positive territory, though energy stocks struggled as crude oil prices fell on the peace talk developments.
Australia
Local futures are pointing to a strong open for the ASX 200, with SPI contracts indicating a 1 per cent gain to around 8,633 points when trading commences. The positive setup comes ahead of the crucial monthly CPI release at 11:30am AEDT, with NAB expecting headline inflation of 3.6 per cent year-on-year.
Temple & Webster provided an early boost to sentiment, reporting an impressive 18 per cent lift in revenue for the July to November period. The online retailer continues to take market share, with its home improvement division posting standout growth above 40 per cent year-on-year.
Fisher & Paykel Healthcare delivered strong first-half results across the Tasman, with net profit jumping 39 per cent and prompting an upgrade to full-year guidance. The respiratory equipment maker now expects fiscal 2026 net profit between NZ$410 million and NZ$460 million.
On the corporate front, Brookfield and Singapore’s GIC are reportedly preparing a multi-billion dollar buyout bid for National Storage, with sources suggesting the offer price could be pegged close to net tangible assets. Harvey Norman, Liontown Resources and Megaport are among companies holding annual meetings today.
Commodities and currencies
Commodity markets reflected the mixed signals from geopolitical developments and economic data. Crude oil tumbled to monthly lows, with Brent futures dropping 1.5 per cent to US$62.44 per barrel as traders weighed the possibility that Russian supply could remain in global markets following any peace agreement.
Base metals took a different view, with copper prices rising on expectations that reduced geopolitical tensions could boost industrial demand. Iron ore edged 0.7 per cent higher to US$105.75 per tonne, providing support for Australian mining giants.
The Australian dollar gained modestly against the greenback, adding 0.2 per cent to US64.75 cents as the US dollar index fell 0.3 per cent. Gold remained relatively steady near US$4,133 per ounce, while Bitcoin retreated 2 per cent to trade below US$88,000.
Economic Calendar
US:
- MBA Mortgage Applications 23:00
- Initial Jobless Claims 00:30
- Durable Goods Orders 00:30
- MNI Chicago PMI 01:45
AU:
- CPI YoY 11:30
This article was written by Calvin Curdie, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
