United States
In a quiet Monday session, U.S. stocks edged lower as traders adjusted their positions ahead of today’s CPI release. The S&P 500 slipped 16 points, or 0.15%, to close at 6,373, with eight of the eleven sectors in the red, though losses were modest.
The Dow Jones Industrial Average fell 200 points (-0.45%) to 43,975, while the Nasdaq declined 0.30% to finish at 21,385.
Trade-related headlines dominated the news. The Financial Times reported details of a deal between Nvidia and AMD and the U.S. government regarding revenue from AI chip sales to China. Under the arrangement, both companies will pay 15% of their sales from these products in exchange for U.S. export licences. Former U.S. trade negotiator Stephen Olsen described the deal as “in effect the monetization of U.S. trade policy” and warned, “we’ve entered into a new and dangerous world.” Some analysts suggested the arrangement resembled an export tax, which is prohibited under the U.S. Constitution. Nvidia shares eased 0.35% to $182.06, while AMD slipped 0.28% as investors digested the news.
Separately, President Trump announced a further 90-day extension to the tariff deadline with China. Current tariff rates remain at 30% on U.S. imports from China and 10% on Chinese imports from the U.S., with negotiations ongoing. A National Foreign Trade Council survey found that, contrary to the administration’s stated aim of “encouraging investment,” the shifting tariff policies are instead “delaying growth, disrupting operations, and raising legal concerns” for companies.
Major company share moves were generally muted, except for Tesla, which climbed 2.85% to $339.03. Analysts attributed the rise to extended order wait times in the U.S., with demand boosted by buyers looking to secure federal tax credits of up to US$7,500 per vehicle before they are reduced at the end of the quarter.
In fixed income, bond yields were little changed as traders awaited the CPI data. The 10-year yield ended at 4.28%, while the 2-year yield closed at 3.76%. Economists polled by Bloomberg expect July CPI to rise 0.2%, taking the annual rate to 2.8%, while core CPI (excluding food and energy) is forecast to rise 0.2% for a 3.0% annual increase. Stronger-than-expected figures could temper market expectations for a 25-basis-point rate cut at the Federal Reserve’s September meeting.
Europe
European stocks began the week on a subdued note, with the Euro Stoxx 600 edging down 0.06% to close at 546.76. Sector performance was mixed, with five sectors higher and six lower. Communication services and financials led the gainers, with the latter continuing its recent outperformance, while consumer discretionary was the weakest performer.
The strength in financials helped the UK’s FTSE 100 rise 0.37% on Monday to close at 9,129.
Investor attention in Europe was focused on the upcoming talks between the Presidents of the United States and Russia regarding Ukraine. EU leaders were expected to meet with U.S. President Trump ahead of the discussions in Alaska. Hopes of a peace deal or ceasefire prompted investors to reduce exposure to the defence sector, with Germany’s Rheinmetall falling 4.63% and the UK’s BAE Systems down 1.24%. The aerospace and defence sub-sector ended the day 1.05% lower.
Bond yields were marginally higher on the continent, with Germany’s 10-year yield up 1 basis point to 2.70%, while the UK’s 10-year yield eased 4 basis points to 4.56%. Investors now await eurozone and UK employment data due later in the week, along with any geopolitical developments from the high-level meetings.
Australia
The Australian share market began the week on a strong note, advancing to a new record high with a gain of 37.70 points, or 0.43%, to close at 8,844.80. Sector performance was broadly positive, with eight of the eleven sectors finishing higher, led by materials. The weakest performer was consumer discretionary, which fell 1.63%.
Materials benefited from stronger iron ore prices and a sharp rally in lithium stocks after reports emerged of a production halt at a major mine in China’s Jiangxi province for at least three months—a development that may ease oversupply concerns. Pilbara Minerals surged 38 cents, or 19.69%, on the news, while Liontown Resources jumped 18.34% to $1.00. Gains in iron ore over the weekend also fuelled further buying in BHP, which rose 1.64% to $40.87, and Fortescue, which climbed 3.02% to $19.42.
Consumer discretionary stocks lagged after JB Hi-Fi reported full-year earnings that missed analysts’ expectations, sending its share price down 8.39% to $107.83. The company also declared a final dividend of $1.05 and a special fully franked cash distribution of $1.00. In addition, the CEO announced plans to retire in October, with the Chief Operating Officer set to take over. Wesfarmers also declined, falling 1.83% to $88.61.
Financials were mixed. The major banks all posted gains, with Westpac leading, up 1.93%, while NAB was the laggard, rising 0.86%. Insurers, however, came under pressure, with IAG down 3.84% and Suncorp sliding 4.22%.
Bond yields were steady ahead of the Reserve Bank of Australia’s interest rate decision, with the 10-year yield at 4.24% and the 2-year at 3.34%. Traders remain cautious following the RBA’s surprise decision not to cut rates at the July meeting, despite widespread expectations for a reduction. With inflation data easing since then, most economists anticipate no further surprises today, expecting the benchmark rate to be lowered to 3.60%.
ASX 200 futures drifted lower in overnight trading closing with a 0.15% loss having fallen 13 points. The Australian dollar marked time and is trading at 0.6514 against the US dollar
Commodities
Gold prices fell on Monday after the U.S. President clarified that tariffs would not be imposed on gold bars, easing earlier confusion over their status. The statement triggered selling in the precious metal, with gold dropping US$55, or 1.63%, to close at US$3,342. Expectations for progress in U.S.–Russia talks later this week also saw traders reduce exposure.
Oil prices were steady, with both Brent and West Texas Intermediate posting small gains. WTI rose 0.15% (+8 cents) to settle at US$63.96, while Brent gained 0.15% to US$66.69. OPEC is set to release its monthly market analysis today, which should provide further insight into the market’s supply-demand dynamics.
In base metals, copper slipped US$30 (-0.30%) to US$9,732 a tonne after news that Codelco had resumed some operations at its El Teniente mine in Chile following last week’s mining accident, described as the country’s worst in a decade. Iron ore extended recent gains, rising 0.80% to US$103.85, as traders increased positions amid Chinese government efforts to curb oversupply and cut production in several key industries.
Among soft commodities, cocoa prices surged more than 5%—the largest daily rise since December—on concerns over tightening inventories and a weaker West African crop outlook. Coffee prices also advanced, gaining 3.84%. Despite these moves, both commodities remain below the record highs reached in May.
Economic Calendar
AU:
- NAB Business Confidence (Jul) – 11.30am
- RBA Interest Rate Decision – 2:30pm
- RBA Press Conference – 3:30pm
EU:
- German ZEW Economic Sentiment Index (Aug) – 7:00pm
US:
- Consumer Price Index: CPI (Jul) – 10:30pm
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
