United States
U.S. equity markets advanced overnight, snapping a two-day decline, as Federal Reserve Chair Jerome Powell reassured investors the central bank is prepared to wait for greater clarity before adjusting interest rates. Powell’s remarks came after the Federal Open Market Committee voted unanimously to keep the federal funds rate unchanged at 4.25% to 4.5%, citing persistent uncertainty stemming from President Trump’s escalating tariff agenda.
The S&P 500 rose 0.4%, lifted by strength in chipmakers after Bloomberg reported the Trump administration plans to roll back certain AI semiconductor export restrictions introduced under President Biden. The Nasdaq 100 also climbed 0.4%, while the Dow Jones Industrial Average gained 0.7%. A key semiconductor index rose 1.7%, reflecting optimism about a potential easing in regulatory pressure on the sector.
Investor sentiment was further supported by Friday’s employment data, which showed the U.S. unemployment rate holding steady at 4.2%, suggesting that the labour market remains resilient despite growing macroeconomic headwinds. However, Powell warned that tariffs could complicate the Fed’s dual mandate by simultaneously pressuring inflation higher and weakening job growth.
In corporate news, Walt Disney surged 11% after issuing an upbeat profit forecast, while Alphabet slid 7.5% following comments from Apple that it is exploring a new AI-driven search engine to replace Google’s default on Safari. Uber Technologies reported soft gross bookings and cited a slowdown in inbound U.S. travel, while CrowdStrike announced it would cut 500 jobs, or roughly 5% of its workforce, as it pursues revenue growth targets.
Bond markets responded calmly to the Fed’s message. The yield on the 10-year Treasury note eased three basis points to 4.27%, while the Bloomberg Dollar Spot Index rose 0.5%, marking a fourth straight session of gains for the greenback as investors moderated expectations for near-term rate cuts.
Swap markets now imply just over 75 basis points of easing for the remainder of 2025—down from four cuts priced in last week—reflecting greater uncertainty over the Fed’s policy path amid geopolitical and trade volatility.
Europe
European equity markets pulled back as investors adopted a cautious stance ahead of the U.S. Fed’s rate announcement and amid rising global trade tensions. The Stoxx Europe 600 slipped 0.5%, with losses concentrated in the healthcare and retail sectors, while media and basic resources stocks outperformed.
Healthcare names including Roche, Sanofi, and GSK were under pressure after the U.S. FDA appointed Vinay Prasad—known for his opposition to COVID-19 vaccine mandates—to head its biologics division. The move raised questions about the future of immunotherapy and vaccine approval processes, leading to weakness in both European and U.S.-listed biotech shares.
Meanwhile, Novo Nordisk gained over 1% despite trimming its 2025 revenue forecast. Investors appeared to focus instead on expectations that competitive pressures on its blockbuster obesity drug, Wegovy, may ease. In contrast, Demant fell sharply after flagging a slowdown in the global hearing aid market, and Ambu A/S tumbled following a disappointing update from its endoscopy division.
European stocks had recovered significantly from the April downturn driven by Trump’s tariff threats but have since struggled for direction as trade uncertainty lingers. The European Union has signalled it is prepared to impose retaliatory tariffs on U.S.-made goods, including vehicles and aircraft, if trade negotiations do not progress.
On the macro front, investors continue to weigh softening inflation indicators against improving earnings results. German Bund yields fell seven basis points to 2.47%, while UK 10-year gilts dropped to 4.46% amid safe-haven flows.
Despite recent volatility, European indices remain among the best-performing globally this year, supported by expectations for fiscal stimulus and continued monetary easing. However, strategists warn that the outlook remains fragile, with recession risks and political unpredictability, particularly from the U.S., likely to trigger further market swings.
Australia
The Australian sharemarket is expected to open modestly higher, with ASX 200 futures up 8 points, or 0.1%, to 8,188. This follows a stronger finish on Wall Street, where gains in the tech and energy sectors helped push major indices into positive territory. Locally, the S&P/ASX 200 Index rose 0.3% on Wednesday to 8,178.3, supported by optimism around U.S.–China trade talks and a fresh wave of stimulus from China’s central bank.
Nine of eleven sectors posted gains, led by energy, which rallied alongside commodity prices. Woodside and Santos gained 1.7% and 2%, respectively, while iron ore heavyweight BHP rose 0.7% to $37.93 as iron ore futures ticked higher. Chinese authorities cut the reserve requirement ratio and reduced short-term lending rates, injecting over $200 billion in liquidity—a move seen as supportive of commodity demand.
The big banks also supported the rally. NAB jumped 1.6% after first-half results exceeded analyst expectations, helped by cost management and solid lending volumes despite a dip in its net interest margin. ANZ and Macquarie rose modestly, while CBA edged 0.5% lower.
Tech and consumer discretionary stocks outperformed. Temple & Webster surged 8% after upgrading its earnings guidance, and Zip Co soared 13% following a presentation indicating a sharp turnaround in 2025 profitability. In contrast, Nuix slumped 16% after withdrawing full-year forecasts, citing delayed IT contract decisions by clients.
Healthcare and utilities weighed on the index as investors rotated out of defensive sectors. CSL dropped 3% to $242.98, while Telix Pharmaceuticals fell 3.4% to $27.10.
There are no major economic data releases scheduled locally today. However, traders will be closely watching developments from Thursday’s trade meetings in Switzerland, where U.S. and Chinese officials are set to engage in high-level discussions.
Commodities
Commodities were mixed overnight. Brent crude dropped 1.9% to USD 60.96 a barrel as traders weighed soft U.S. travel data and signs of stable output levels. WTI crude also eased. Despite the drop, energy sentiment remained buoyed by Chinese stimulus and hopes for de-escalation in global tariffs.
Gold was flat at USD 3,364.46 an ounce, consolidating after recent gains as risk appetite returned to equity markets. Silver held steady, while iron ore rose 0.8% to USD 98.25 a tonne, driven by improved demand expectations from China.
The Australian dollar weakened 1.1% to USD 0.6425, hurt by falling risk sentiment in currency markets and a stronger U.S. dollar. The greenback climbed as Powell struck a patient but firm tone, reinforcing the Fed’s commitment to data dependence. The euro and British pound fell 0.6% and 0.5%, respectively, while the yen dropped 1% to 143.81 per U.S. dollar.
Bitcoin extended its gains, rising 2.4% to USD 96,839, as digital asset markets continued to recover from last month’s dip, supported by easing regulatory fears and broader bullish sentiment.
Economic Calendar
No major data releases
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
