United States
US equities ended the week mixed on Friday as a late-session selloff in technology shares trimmed earlier gains, capping a volatile week dominated by AI enthusiasm, political headlines, and renewed economic concerns. The Nasdaq 100 slipped 0.4% after hitting fresh records earlier in the week, while the S&P 500 managed to close flat, extending its longest winning streak since July. The Dow Jones Industrial Average rose 0.5%.
The pullback in tech came as investors questioned lofty valuations in the artificial intelligence space, with a sentiment index compiled by Barclays sitting near euphoric levels. Palantir Technologies plunged 7.5% after reports surfaced alleging flaws in its defence communications systems — claims the company quickly rejected. Despite the stumble, the S&P 500 has now gone 114 trading sessions without a 5% drawdown, underscoring the market’s resilience.
Macroeconomic data offered little reassurance. With the US government shutdown entering its third day, official labour data was delayed, though private-sector surveys suggested slower hiring, modest wage growth, and softening demand for workers in September. The Institute for Supply Management’s services index showed business activity contracting for the first time since the pandemic.
Traders continued to bet on further monetary easing, pricing in another quarter-point rate cut in October despite limited visibility on official data. US 10-year Treasury yields fell five basis points over the week to 4.12%, while the dollar posted its worst weekly decline since August.
Corporate headlines added to the caution. Boeing delayed the first commercial flight of its 777X to 2027, raising the prospect of further charges. Applied Materials warned of a USD 600 million revenue hit for 2026, and 3M reportedly plans to divest several industrial units. Meanwhile, AI-driven deal activity remained robust as Global Infrastructure Partners is said to be in talks to acquire Aligned Data Centers in a USD 40 billion transaction, underscoring continued capital inflows into the sector.
Europe
European markets extended their rally, closing out their strongest week since May as optimism surrounding AI and monetary easing lifted sentiment. The Stoxx Europe 600 Index advanced 0.5% to a record high, supported by strength in miners and healthcare stocks. France’s CAC 40 rose 0.3%, while the UK’s FTSE 100 edged higher.
Investors continued to rotate into growth-sensitive sectors, betting on a dovish policy path from the Federal Reserve and resilient corporate earnings across Europe. Union Bancaire Privée’s Maud Giese noted that much of this year’s gains have been driven by multiple expansion rather than earnings growth, cautioning that macroeconomic shocks could trigger a swift reversal.
Political headlines in France weighed slightly on sentiment as opposition parties criticised Prime Minister Sebastien Lecornu’s budget proposals, threatening to deepen fiscal gridlock. Meanwhile, in the UK, the 10-year gilt yield eased to 4.69%, reflecting broader confidence in slowing inflation trends across major economies. Germany’s benchmark 10-year Bund yield remained steady at 2.70%.
Australia
The Australian sharemarket is poised to start the week on a strong note, with futures pointing to a 0.3% rise at Monday’s open. That could see the S&P/ASX 200 Index challenge its all-time high of 9,054, set in late August. The gains come as investors look past the US government shutdown and focus on the likelihood of further global rate cuts.
“While domestic equity valuations are trading above long-run benchmarks, it’s been hard to fight the rally,” said George Boubouras, Managing Director at K2 Asset Management. “Positive sentiment remains, supported by resilient US earnings and expectations of additional Fed easing.”
The week ahead will be relatively quiet for local economic data, though Reserve Bank of New Zealand’s policy decision on Wednesday is expected to attract attention. Economists anticipate a 25-basis-point cut to 2.75%, with some calling for a larger move to 2.5% amid weak growth. In Australia, RBA Governor Michele Bullock’s testimony before the Senate Economics Committee on Friday will likely reaffirm the central bank’s cautious and data-dependent stance.
Commodities and currencies
Commodity markets were mixed as oil prices stabilised following geopolitical tensions in the Middle East. West Texas Intermediate crude rose 0.3% to USD 60.67 a barrel, while Brent crude gained 0.4% to USD 64.39. Prices initially fell during the week as traders awaited the outcome of the next OPEC+ supply meeting, but rebounded on President Trump’s warnings to Hamas, which stoked geopolitical risk premiums.
Gold extended its winning streak to seven weeks, climbing 0.8% to USD 3,887 an ounce as falling bond yields and central bank buying underpinned demand for the precious metal. Iron ore edged 0.2% higher to USD 104 a tonne amid signs of improving steel demand in China, though mainland markets remain closed for the national holiday.
In currency trade, the US dollar weakened 0.1% for the week, contributing to modest gains across major peers. The Australian dollar was steady near US66 cents, while the euro rose to USD 1.1744. The Japanese yen fell sharply after Sanae Takaichi’s victory in the ruling-party leadership race fuelled expectations of expansionary fiscal policy, with the currency nearing the 150 per dollar mark.
Cryptocurrencies continued to rally, with Bitcoin rising 1.6% to USD 122,412 and Ether adding 0.3% to USD 4,508, buoyed by optimism around “Uptober” — a historically strong month for digital assets.
Economic Calendar
No major data
This article was written by James Woods, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
