United States
US stock markets reached new record highs for the third consecutive day, driven by a better-than-expected non-farm payrolls report that encouraged investors to push shares higher. The gains were broad-based across all major indexes.
The Dow Jones Industrial Average rose 0.77%, closing at 44,828, marking a 344-point gain. The Nasdaq Composite climbed 1.02%, while the S&P 500 added 51 points, closing at 6,279 with a 0.83% increase. All sectors of the S&P 500 finished higher, with technology and financials leading the charge in a broad rally, albeit on lower trading volume due to the shortened holiday session.
The non-farm payroll report revealed the addition of 147,000 jobs, exceeding expectations, and included an upward revision to May’s numbers. The unemployment rate also declined to 4.1%. These stronger-than-anticipated employment figures led bond traders to dismiss any chance of a rate cut by the Federal Reserve in July, with bond yields rising across the curve. Expectations for rate cuts later in the year were also reduced. The 2-year note increased by 9 basis points to 3.88%, while the 10-year note rose by 7 basis points to 4.34%.
In other news, after the markets closed, the US House of Representatives passed the tax and spending bill proposed by President Trump, marking a significant victory for the administration. The bill is now set to be signed into law.
The move in equities capped a rally of more than 5% in the S&P 500 over the past two weeks, which Kristina Hooper, Chief Market Strategist at Man Group, described as “a real bout of irrational exuberance: the stock market is very biased towards optimism.”
Momentum stocks continued their upward trend on Thursday. Nvidia gained another 1.33%, reaching $159.34, while Microsoft climbed 1.58% to $498.84, despite announcing 9,000 job cuts, or 4% of its workforce. These layoffs are part of the company’s effort to maintain cost control while continuing to invest in AI. In contrast, Meta has been aggressively recruiting top AI talent, with its shares rising 0.76% to $719.01.
Solar and wind energy companies also saw gains for the second day in a row, as the new tax bill, which is set to pass through Congress, eliminates a tax on the sector. First Solar surged 8.51%, while Nextera Energy, the largest renewable energy developer in the US, gained 1.18%.
US markets will be closed on Friday in observance of Independence Day.
Europe
European markets rallied, with the Euro Stoxx 600 rising 0.47% to close at 543.76, supported by strong demand in the banking sector, which added 1.13%. The FTSE 100 gained 0.55%, closing at 8,823, while the mid-cap sector in the UK saw a notable 1.2% jump. This surge mirrors the recent trend in smaller US companies as investors find value in that part of the economy. The positive sentiment was further boosted by European Commission President von der Leyen’s announcement that the EU aims to sign an in-principle trade agreement with the US ahead of next week’s deadline.
The optimistic outlook on bilateral trade deals and better-than-expected US job numbers helped ease growth concerns, pushing stocks higher. German engineering firm Siemens rose 0.82%, benefiting from the US lifting export restrictions on chip design software sales to China. UK banks, including Lloyds and Natwest, both gained more than 3%.
Bond yields were lower in Europe, with UK yields falling 8 basis points to 4.53%, reversing yesterday’s large increase, as confidence in Chancellor Reeves’ position helped ease concerns over UK finances. German bond yields dropped 4 basis points to 2.61%.
Australia
Thursday’s trading on the Australian equity market saw a mixed performance, with two of the biggest stocks telling contrasting stories. One stock surged while the other declined, resulting in the ASX 200 finishing relatively flat, down by 1.90 points to close at 8,595.80. Only three sectors posted gains, while seven saw losses. The materials sector was the standout performer, continuing its global rally with a 3.02% increase. Meanwhile, communication services and financials were the worst performers.
The materials sector was led by industry giant BHP, which surged 5.56% to close at $39.27. The company benefited from strong demand for its shares in the US, and the rally was further bolstered by Chinese officials’ promises to clamp down on disorderly price competition among businesses. Additionally, China’s top economic planning committee vowed to end domestic protectionism in an attempt to counter the country’s deflationary spiral. These developments were positively received by iron ore and steel analysts which saw the price of iron ore up by an additional 0.80%. Other major miners, including Fortescue and Rio Tinto, saw gains of 1.8% each.
In contrast, the move into bulk miners seemed to come at the expense of the high-flying banks. Commonwealth Bank (CBA) dropped 2.17% to $179.69, and all other banks declined, except for ANZ. Insurers also experienced significant selling pressure, with IAG falling 3.05% and Suncorp down 3.39%.
In the communication services sector, online portals led the declines. REA Group dropped 3.43% to $231.80, and Carsales (Car Group) fell 1.60%.
In individual stock news, ProMedicus saw a significant jump of 7.78% to $307.39 following the announcement of a new $170 million, 10-year deal with Colorado-based UCHealth, along with a $20 million contract renewal with FMOL. Reece Plumbing rebounded 4.01%, attracting bargain hunters.
Bond yields rose, with the 10-year bond adding 3 basis points to 4.18%, while the Australian dollar remained steady at 0.6570.
ASX200 futures moved higher overnight in sympathy with US moves. The contract was higher by 27 points, 0.31% suggesting a positive start to today’s trading.
Commodities
Copper took a pause in Thursday’s trading, retreating by US$58 to close at US$9,954 per tonne on the LME. The 0.58% decline came as traders took profits, questioning the strength of demand that had driven copper higher earlier in the week. In contrast, iron ore continued its upward momentum, closing at US$96.85 in New York, marking a 1.3% gain over the last 24 hours.
Oil prices slipped as traders pared positions ahead of the long weekend. West Texas Intermediate fell 0.67% to US$67, while Brent crude dropped 0.30% to US$68.90. Data from the EIA (Energy Information Administration) revealed an unexpected rise in US crude inventories, adding slight downward pressure to prices. The upcoming expiry of the tariff deadline next week is expected to dominate oil price movements in the near term.
Gold fell 0.93% to US$3,326 as traders adjusted expectations for lower rates were priced out of the market and a rate cut in July was discounted following the payrolls data. On the other hand, silver rose 0.79% to US$36.84, continuing its positive momentum.
Economic Calendar
AU:
- Household Spending (May) – 11.30am
US:
- US Financial Markets Closed for Independence Day
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
