United States
U.S. equity markets closed higher midweek, recovering from an earlier sharp sell-off triggered by reports suggesting that President Trump was preparing to dismiss Federal Reserve Chairman Jerome Powell. The President swiftly denied the claims, which helped stabilise sentiment and led to a rebound in equities. Bond yields initially spiked on the news but later settled.
At the close, the Dow Jones Industrial Average rose by 231 points (+0.53%) to 44,254, while the Nasdaq Composite gained 0.26% to end at 20,730. The S&P 500 advanced 20 points, or 0.32%, to finish at 6,263. Most sectors ended the session marginally higher, with only three finishing in the red.
Earnings season continued with notable reports from Goldman Sachs, Morgan Stanley, and Bank of America. All three banks exceeded analyst expectations, primarily due to stronger-than-expected performance from their trading divisions, which capitalised on recent market volatility. Despite the positive results, only Goldman Sachs saw its share price rise, gaining 0.90%, while the other two declined.
Healthcare giant Johnson & Johnson surged 6.19% after raising its 2025 forecast, citing a more favourable cost outlook. The company lowered its expected tariff exposure on its medical devices unit from USD 400 million to USD 200 million. The CFO added that the company could absorb the reduced tariffs while still upgrading its guidance, though cautioned that the outlook for 2026 remains uncertain given ongoing market dynamics.
Ford Motor Co. declined 2.85% after the National Highway Traffic Safety Administration announced a recall of over 700,000 SUVs due to a potential fuel leak. In contrast, Tesla climbed 3.5%. The company also announced plans to launch a six-seater version of its Model Y in China.
Bond yields reacted sharply to the Fed-related headlines, with the U.S. 10-year Treasury yield initially jumping 6 basis points before reversing to end the day down 3 basis points at 4.45%. The 2-year yield also fell, dropping 5 basis points to 3.89%.
On the economic front, the latest Producer Price Index (PPI) showed no change month-over-month, defying economist expectations for a 0.2% increase. Additionally, the previous month’s figure was revised up to a 0.3% gain.
Europe
European shares closed lower on Wednesday, weighed down by a disappointing outlook from Dutch semiconductor manufacturer ASML, which dampened investor sentiment across the region. The Euro Stoxx 600 fell 0.57% to 541.81, with nine of eleven sectors ending in negative territory. In the UK, the FTSE 100 edged down 0.13% to close at 8,926.55.
ASML issued a warning that it may not meet its 2026 growth targets due to ongoing uncertainty surrounding tariffs. This uncertainty has led the company to delay finalising planned investments in the U.S. ASML shares plunged 11.37% on the news. Despite the cautionary outlook, the firm reported stronger-than-expected second-quarter orders, driven by demand for AI-related chips. The broader semiconductor sector also declined in response.
Elsewhere, Renault announced a profit downgrade, sending its shares tumbling 18.47%. The update sparked broader selling across the auto sector, with Volkswagen falling 3.66%. Analysts warned that other carmakers may also revise their earnings forecasts. Stellantis dropped 6.21% after confirming it would abandon its hydrogen fuel cell vehicle development.
On a more positive note, luxury goods group Richemont rose 1.15% after reporting a 6% rise in quarterly sales, driven by strong performance from its jewellery brands, Cartier and Van Cleef & Arpels. The company noted stabilising demand across its portfolio, particularly in Asia.
In macroeconomic news, UK inflation unexpectedly spiked to 3.6% year-on-year in June. The surprise rise saw traders scale back expectations of a rate cut from the Bank of England. UK 10-year gilt yields rose 2 basis points to 4.64% in response. Conversely, German bond yields moved lower, with the 10-year Bund yield down 3 basis points to 2.68%.
Australia
The Australian share market declined on Wednesday, recovering from early session lows to close at 8,561, down 68 points or 0.79%. The fall followed a negative lead from U.S. markets, where renewed inflation concerns and expectations of a delayed interest rate cutting cycle weighed on investor sentiment. Nine of the eleven sectors finished lower, led by declines in financials and materials.
The technology sector outperformed, supported by a 1.88% gain in NextDC and a sharp 6.28% rally in Megaport, which closed at $14.05 following broker upgrades.
The materials sector ended mixed. While offshore selling pressured bulk miners early in the session, a sharp rebound in iron ore prices toward US$100 per tonne helped reverse some losses. BHP closed at $39.11, down 0.71%, while Rio Tinto rose 0.22% to $110.52. Rio released its quarterly production report, noting a 5% year-on-year increase in iron ore output from the Pilbara. The company also stated that copper production for 2025 is expected to reach the upper end of guidance, following a strong second quarter.
Gold miners underperformed, with Evolution Mining falling 2.34% and West African Resources down 3.35%. Newmont dropped 5.73%, mirroring its overnight decline in the U.S. after the unexpected resignation of its CFO.
The banking sector came under pressure as investor confidence weakened. Commonwealth Bank fell 1.22% to $177.50, while NAB declined for a second consecutive day, losing 3.38% to $38.27 amid continued attention on recent news coverage involving the CEO. Regional lenders were also impacted, with Bank of Queensland down 1.77% and Bendigo and Adelaide Bank falling 2.02%.
Today brings the monthly employment data with economists expecting an increase in jobs of 20,000 and the unemployment rate to be steady at 4.1%.
Bond yields edged higher, with the 10-year yield rising three basis points to 4.40%.
Australian stocks are expected to begin the day higher as the futures market moved up 53 points overnight, a gain of 0.62%. The Australian dollar is steady at 0.653 against the US dollar.
Commodities
Oil prices were little changed on Wednesday, with West Texas Intermediate (WTI) crude slipping 14 cents (-0.21%) to settle at US$66.38, while Brent crude inched higher to US$68.73. Traders reacted cautiously to the latest EIA data showing an unexpected rise in U.S. gasoline inventories during the peak driving season, although a drawdown in U.S. crude stockpiles partially offset the bearish tone.
Gold rose by US$22.58 (+0.68%) to close at US$3,347 per ounce. The precious metal briefly spiked to US$3,377 following initial reports suggesting the removal of the Federal Reserve Chair, but later pulled back into its recent trading range after those reports were denied.
Bitcoin remained steady, trading at US$119,843.
Iron ore extended its upward momentum, closing at US$100.80 in New York trading, following strength in the Asian session. The Singapore futures contract rose by 2% over the past 24 hours, signalling continued bullish sentiment in the steelmaking ingredient.
Copper prices were largely unchanged, with the LME spot price easing by US$10 to US$9,635 per tonne
Economic Calendar
AU:
- Consumer Inflation Expectations (Jul) – 11.00am
- Employment Data (Jun) – 11:30am
US:
- Retail Sales (Jun) – 10:30pm
- Export/Import prices (Jun) -10:30pm
- Philadelphia Fed Manufacturing Index (Jun) – 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.
