United States
Wall Street finished largely flat on Wednesday after a stronger-than-expected US jobs report forced traders to rethink the timing of the next Federal Reserve rate cut.
The S&P 500 ended the session near 6,940, barely changed after a choppy day of trading, while the Dow Jones Industrial Average dipped 0.1%. The tech-heavy Nasdaq 100 managed a modest 0.3% gain, buoyed by pockets of strength in semiconductor and artificial intelligence names.
The main catalyst was the January non-farm payrolls report, which showed 130,000 jobs added during the month, roughly double the median forecast. The unemployment rate also ticked down to 4.3%, painting a picture of a labour market that continues to stabilise rather than soften. The figures prompted money markets to push the expected timing of the Fed’s next rate reduction out to July, having previously pencilled in a June move.
Short-dated Treasuries bore the brunt of the repricing, with two-year yields climbing six basis points to around 3.51%. Bank of America said the report vindicated its view that the Fed would not cut rates under chairman Jerome Powell, whose term expires in May. Kansas City Fed president Jeff Schmid echoed that caution, arguing rates should remain at a “somewhat restrictive” level given persistent inflation pressures.
In corporate news, Cisco Systems delivered a weaker-than-expected profitability forecast for the current quarter, with concerns mounting that rising memory chip prices are squeezing margins. McDonald’s was a bright spot, reporting its fastest US sales growth in more than two years as value meals continued to resonate with budget-conscious consumers.
US software stocks endured another bruising session amid growing fears about artificial intelligence disruption. Atlassian dropped more than 6%, extending its five-session decline to over 15%. Bitcoin also fell for a third consecutive session, briefly dipping below $US67,000 and dragging crypto-exposed names such as Coinbase and Robinhood lower.
Europe
European equities eked out a small gain, with the Stoxx 600 finishing 0.1% higher as a raft of corporate earnings delivered mixed signals.
Siemens Energy was the standout performer, surging 8.4% to a record high as booming electricity demand continued to fuel sales of its gas turbines and power grid products. Dutch brewer Heineken also impressed, advancing 4.4% after announcing plans to cut between 5,000 and 6,000 jobs as it grapples with weakening demand for alcohol.
On the other side of the ledger, French software group Dassault Systemes tumbled 20% after its outlook fell well short of expectations. The result added to a broader wave of anxiety sweeping through technology and software names, with investors increasingly worried that AI could upend traditional business models. SAP was also weaker, while UK wealth manager St James’s Place plunged 13% following sharp declines in US peers overnight.
Barclays strategists poured fuel on the fire by downgrading European insurers, warning that valuations could decline a further 5% to 25% as AI disruption fears spread beyond the technology sector. Europe’s benchmark index is edging back towards record highs, though the earnings season has been mixed so far, with more analysts downgrading profit estimates than upgrading them since the end of 2025.
Australia
The Australian sharemarket is poised for a quiet open on Thursday, with S&P/ASX 200 futures pointing up just 4 points, or 0.04%, to 8,962. That comes after a stellar session on Wednesday, where the benchmark surged 1.7% to 8,914.80, putting it within striking distance of its October record high.
Wednesday’s rally was driven by a blockbuster result from Commonwealth Bank, which jumped 6.8% to $169.56 for its biggest single-day gain since March 2020. Cash profit came in $200 million ahead of market expectations for the half year, while its interim dividend of $2.35 topped consensus forecasts. The other major banks followed suit, with NAB adding 3.4%, Westpac gaining 2.5%, and ANZ rising 1.3%.
James Hardie was another highlight, leaping 10.9% after December quarter EBITDA of $US330 million came in 6% above expectations and exceeded the top end of guidance. Gold miner Evolution Mining extended its gains with an 8.7% jump after declaring a higher-than-expected interim dividend and reporting stronger cash flow.
Not everything went to plan, however. CSL tumbled 4.6% to $163.44 after it parted ways with chief executive Paul McKenzie in the dying minutes of Tuesday’s trade, then on Wednesday posted an 81% slump in half-year earnings to $US400 million. Citi flagged that full-year guidance was now at risk after first-half sales missed consensus by 2% and underlying profit by 4%.
AGL Energy surged 11.8% on an earnings beat, while Aussie Broadband rocketed 14.8% on a deal to acquire AGL’s telecommunications assets. Market operator ASX Ltd fell 1.7% after chief executive Helen Lofthouse abruptly resigned.
Thursday brings another heavy slate of results, including ANZ, Origin Energy, IAG, Breville, Pro Medicus, South32, Northern Star Resources, and Paladin Energy. RBA assistant governor Sarah Hunter is also scheduled to speak on full employment and the labour market at a CEDA event.
Commodities and currencies
Gold extended its remarkable run, climbing 1.2% to $US5,087.72 an ounce as the precious metal continues to attract haven flows. Brent crude also firmed 1.2% to $US69.61 a barrel, supported by ongoing Middle East tensions that are outweighing concerns about a growing supply glut. Nickel extended its gains after Indonesia signalled a sharp cut to output this year, curbing supply from the world’s largest producing nation.
Iron ore was essentially flat at $US100.15 a tonne.
The Australian dollar pushed to a three-year high, gaining 0.8% to US71.29 cents as the greenback softened despite the strong jobs data. The US 10-year Treasury yield sat at 4.18%, while the Australian 10-year advanced two basis points to 4.75%.
Bitcoin slipped 2% to $US67,412, extending its losing streak to three sessions as the broader risk-off mood in speculative assets persisted.
Economic Calendar
AU:
- Consumer Inflation Expectations 11:00
US:
- Initial Jobless Claims 00:30
This article was written by Calvin Curdie, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
