United States
All U.S. indexes traded higher to kick off a data-heavy week, with lower oil prices boosting investor sentiment. The small-cap Russell 2000 led the day, gaining 1.72%. The Dow rose 0.65%, adding 273.17 points to close at 42,387.57. The Nasdaq Composite increased by 0.26%, finishing at 18,567.19 with a 48.58-point gain, while the S&P 500 rose 0.27%, adding 15.4 points to close at 5,823.52. Across the S&P, all sectors advanced except energy, with financials and utilities being the top performers.
Both Apple and Alphabet (Google’s parent company) gained 0.80% as traders positioned ahead of their earnings reports. Alphabet reports after the close on Tuesday, with Apple’s report following on Wednesday. Apple closed at $233.40, up $1.99, while Alphabet rose $1.35 to $168.34, a 0.81% gain. Nvidia remained relatively flat, slipping 0.72% to close at $140.52. Tesla declined by 2.48%, dropping $6.68 to close at $262.51, as profit-taking occurred. Reports indicated that some Tesla insiders are preparing to sell up to $300 million in stock over the next six months in line with company policy.
Banks generally performed well, with JP Morgan gaining 1.43% and Bank of America up 1.74% to $42.62. Citigroup surged 3.89%, closing at $64.16, up $2.40 after announcing a strategic agreement with Google Cloud to modernize its technology infrastructure.
Oil stocks saw mixed results, with ConocoPhillips down 1.21% to $102.98, Exxon losing 0.49%, and Occidental Petroleum dropping 1.91% to $50.59. Airline stocks climbed, with Southwest up 3% and Delta rising 2.3%. Delta also announced a lawsuit against CrowdStrike for a July outage-related contract breach and reported a 15% decrease in jet fuel prices over the past three months.
McDonald’s bounced back, gaining 1.4% after announcing that Quarter Pounder burgers would return to the menu following an E. coli outbreak investigation that traced the source to onions.
U.S. Treasury yields rose, with the 2-year yield adding 3 basis points to reach 4.13% and the 10-year yield up by 3 basis points to 4.27%. The U.S. dollar was marginally higher, reaching 104.275, with its largest move against the yen, trading at 153.22. This was attributed more to yen weakness after an election surprise in Japan that may impact their fiscal and monetary policies. The dollar was trading at 1.0815 against the euro.
Europe
The Euro Stoxx 600 rose 0.41%, closing at 520.95, a gain of 2.14 points. Most sectors advanced, with nine in positive territory and two in the red. The energy sector was the day’s weakest performer, impacted by a sharp drop in oil prices. Gains were notable in industrials and financials. In France, the CAC climbed 0.79%, adding 59.4 points, while Germany’s DAX rose 0.35%, up 68.0 points, closing at 19,531.62. The UK’s FTSE 100 also advanced, gaining 0.45% to reach 8,285.62, an increase of 36.78 points.
Declining oil prices weighed on British Petroleum, down 1.43% to 399.1, and Shell, which fell 1.35% in London. These losses, along with declines in gold producers amid decreased risk pricing in gold, led to a dip in the materials sector. Meanwhile, shares benefitting from lower oil prices gained traction. Airline stocks soared, with Germany’s Lufthansa up 2.11% and the UK’s EasyJet adding 2.72%. Travel and leisure sector stocks also advanced.
A major driver lifting the UK index was aerospace firm Melrose, which surged 9.84%. The large-cap stock gained as the company reassured investors about its outlook and clarified some misconceptions analysts had regarding its cash flow. Despite today’s recovery, Melrose shares had previously fallen 40% since April. Meanwhile, Swiss hearing aid manufacturer Sonova rose 7% on news that it would resume sales in U.S. retail giant Walmart.
European bond yields were slightly lower, with Germany’s 2-year yield down 2 basis points to 2.09% and the 10-year yield slipping half a basis point to 2.285%. In contrast, UK yields rose, with the 10-year yield up 2 basis points to 4.25% and the 2-year yield adding 4 basis points to reach 4.20%.
Australia
Advances in US markets overnight has seen the ASX200 futures add 35 points in sympathy, a gain of 0.42%. The AUDUSD continues to slide to begin the day at 0.6584. BHP has added 63c in NY trade to close at the equivalent of A$43.59
The Australian equity market began the week with a modest gain, rising by 10.2 points (+0.12%) to close at 8,221.50. Six out of the eleven sectors posted gains, led by advances in technology and consumer discretionary sectors.
The technology sector rose by 1.97%, buoyed by strong performances from NextDc and Xero as investors returned to the sector. Xero climbed 2.54%, adding $3.75 to close at $151.50, while NextDc gained 3%, closing at $16.49 with an increase of 48 cents. Wisetech also continued its recovery, closing at $113.00 with a gain of $1.00 (+0.89%), following the board’s decision to remove CEO White.
The materials sector was bolstered by higher iron ore prices over the weekend and after Australian close. Iron ore was trading at $US103.80 in Asian trading up 2.6% from 4pm Sydney time on Friday. BHP gained 1.34%, closing at $42.96 with an increase of 57 cents, while Fortescue surged 2.21% to end at $19.41, adding 42 cents. However, Northern Star Resources dropped by 5.52%, shedding $1.01 to close at $17.28 on high volume, following Friday’s 5.05% gain after its first-quarter sales report. Conversely, Newmont rebounded by 2.63% after significant declines on Friday.
Oil stocks declined following a drop in oil prices as a measured response from Israel toward Iran calmed fears among traders. Santos fell 0.58% to $6.89, and Beach Petroleum decreased by 0.39% to $1.27. Paladin Energy, a uranium miner, plunged 15.29% to $10.36, down $1.87, after missing its first-quarter production targets, with the company citing short-term operational issues. Meanwhile, Whitehaven Coal continued to rise, adding 3.71% (up 25 cents) to close at $6.99, supported by favourable production results and broker upgrades.
Banks were generally weaker, with NAB declining 0.72% to $36.67 (down 28 cents) and ANZ dropping 0.82% to $31.45 (down 26 cents). ANZ announced a $196 million charge in its second-half results related to its Suncorp Bank acquisition.
Australian bond yields rose following increase in the US over the weekend. The 2-year bonds yield was up by 7 basis points to 4%, and the 10-year yield increasing by 7 basis points to reach 4.48%. The Australian markets await the critical September quarter CPI on Wednesday to provide more clarity on any RBA moves in rates.
Commodities
Oil prices plunged at the start of the week as tensions between Iran and Israel eased, with Israel’s weekend targeting of military sites in Iran seen as a controlled response. This reassured investors, reducing fears of a broader escalation in the Middle East conflict. In response, WTI crude fell 5.78%, dropping by $4.16 to trade at $67.62, while Brent crude declined 5.73%, down $4.36 to $71.69. Some analysts lowered their oil price targets, and OPEC has yet to signal any changes to its output plans, including a scheduled production increase in December. The cartel’s next meeting is set for early December.
Copper prices also dropped, closing lower by $61 at $9,542 per tonne, a 0.61% decline, as traders reacted to weaker-than-expected industrial profit data released in China on Sunday. Iron ore, however, was slightly up by 0.24% at $103.65 in Singapore following Friday’s gains. In an economic move aimed at bolstering growth, China’s central bank introduced extended repurchase agreements on Monday to support bank liquidity, addressing the upcoming expiration of trillions of yuan in loans as year-end approaches.
Gold edged down by $4.79 to $2,742.76, a 0.18% decline, recovering slightly from early-session lows. The decrease was influenced by a stronger U.S. dollar and higher yields on U.S. Treasury bonds, along with a reduced perception of Middle East-related risk. However, demand was supported by anticipation of significant economic and company data releases and the upcoming U.S. presidential election, all of which could impact market stability. Silver remained steady at $33.70. Meanwhile, Bitcoin rose 2.8%, gaining $1,920 to reach $69,609.69. Increased fund flows into Bitcoin ETFs boosted trader optimism as the cryptocurrency nears previous highs.
Economic Calendar
US:
- Home prices (Aug) – 11:00pm
- JOLTS Job Openings (Sep) – 12:00am
- Conference Board – consumer confidence (Oct) – 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.
