United States
Concerns about the US economy raised by Friday’s data were brushed aside on Monday, as Wall Street rallied on renewed hopes of lower interest rates. Major indexes not only recovered last session’s losses but extended gains, with the Dow Jones Industrial Average jumping 585 points (1.34%) to close at 44,173. The Nasdaq Composite surged 2.10% to 2,212, while the S&P 500 rose 1.47% (92 points) to finish at 6,329.
The rally was broad-based, with 10 of the 11 S&P sectors closing higher. Energy was the only sector to post a small decline. Technology and communication services—two of the hardest-hit sectors—led the rebound as investors stepped in to buy the dip.
Analysts attributed the rally to growing expectations that the Federal Reserve may cut rates as early as September, following weaker-than-expected jobs data. Markets are currently pricing in an 85% chance of a rate cut. In the bond market, yields moved lower in subdued trading ahead of this week’s $125 billion in auctions of 3-, 10-, and 30-year Treasury bonds. The 10-year yield fell 3 basis points to 4.19%, while the 30-year also dropped 3 basis points to 4.79%.
In company news, Tesla’s board approved an interim pay package for CEO Elon Musk, granting him 96 million Tesla shares over two years—valued at $29 billion. Tesla shares rose 2.19% to $309.26. The Magnificent 7 index gained 2.03%, led by Nvidia (+3.62%) and Meta (+3.51%). Amazon, however, declined 1.44% following reports that it plans to dismantle its podcast unit Wondery as part of a broader restructuring. Amazon later denied these reports.
Berkshire Hathaway reported quarterly earnings over the weekend—its first since Warren Buffett announced he will step down at the end of 2025. Operating profit declined by 4%, largely due to weaker insurance underwriting results. The company still has a large cash holding of $344 billion in cash and refrained from repurchasing any of its own shares in Q2. Class A shares fell 2.65% after the company also warned about potential negative impacts from new US tariffs.
After the closing bell, Palantir reported results that beat Wall Street expectations, surpassing $1 billion in quarterly revenue for the first time. The defence-focused AI software firm also raised its guidance. Shares rose nearly 5% in after-hours trading, adding to a 4% gain earlier in Monday’s session.
Looking ahead, today’s trade balance figures and Purchasing Managers’ Index (PMI) data will provide further insight into the health of the US economy and how it is responding to evolving trade policies.
Europe
European equities rebounded on Monday, with the EuroStoxx 600 rising 0.90% to 540.60. Most regional markets closed higher, led by Germany’s DAX with a strong gain of 1.42%. The Swiss market, however, slipped 0.15%, recovering from an initial 1.9% drop, as investors reacted to the US imposing one of the highest tariff rates—39%—on Swiss goods.
In the UK, the FTSE 100 added 0.66% to close at 9,128, driven by a surge in banking stocks. All sectors within the EuroStoxx 600 advanced, with financials and real estate leading the gains.
British banks rallied sharply after the Supreme Court overturned a prior ruling on motor finance commissions, alleviating concerns over potential large-scale consumer compensation payouts. Lloyds jumped 9%, Barclays rose 1.63%, and Close Brothers—most exposed to the car loans scheme—soared more than 30%. The rally extended beyond the UK, with Spain’s Banco Santander climbing 3.96%, marking a broadly positive session for the financial sector.
Oil stocks were mostly lower amid falling crude prices, though BP gained 1.84% after announcing its largest oil discovery in 25 years in Brazil’s Santos Basin.
Meanwhile, the European Union confirmed it would suspend any retaliatory tariffs on the US for six months as both sides work through the final details of the trade agreement reached in late July. Bond yields fell across the region, with Germany’s benchmark 10-year yield down 5 basis points to 2.62%, while Switzerland’s 10-year yield slipped to 0.24%.
Australia
The Australian equity market began the week on the back foot, following a weak lead from U.S. markets on Friday, which contributed to a lower open. However, the market recovered throughout the day, led by strength in the materials sector—particularly gold stocks—and ultimately closed flat, posting a modest gain of 1.7 points (0.02%) to finish at 8,663.70.
Sector performance was mixed, with five sectors advancing and six declining. The weakest performers were financials and energy.
Gold miners were in strong demand after the gold price rallied 2.2% on Friday. Evolution Mining rose 2.55%, while Northern Star surged 5.62% to $16.16. Northern Star also benefited from a broker report suggesting that the recent share price weakness could represent a buying opportunity, following its downgraded full-year guidance due to higher costs and capital expenditure.
Higher iron ore prices supported gains in the mining majors, with BHP adding 0.94% to close at $39.59 and Fortescue rising 1.50%. Rare earths producer Lynas jumped 4.07% to $11.25 after a large block trade of 3.5 million shares was executed at $11.31.
Technology stocks traded lower, led by WiseTech, which fell 1.74% after announcing the completion of its acquisition of U.S.-based cloud supply chain platform E2Open.
Financials continued to weaken, with the sector down another 0.57%. All major banks declined, with ANZ the worst performer, falling 1.55%. Insurance stocks were also under pressure, with QBE sliding 1.95%.
In company news, Endeavour Group jumped 2.97% after its Executive Chairman resigned following a dispute with the board. The move has sparked speculation that the hospitality group may consider spinning off its retail chains—BWS and Dan Murphy’s—from its pub portfolio, potentially unlocking shareholder value.
Australian government bond yields remained steady, with the 10-year note holding at 4.31%. The Australian dollar was also stable and begins the day at 0.6469 against the U.S. dollar.
Australian equity markets are expected to open higher as the overnight futures trading rose in concert with US markets adding 86 points, an advance of 1%.
Commodities
Oil prices declined on Monday after OPEC+ confirmed plans to increase production in September, committing to add an additional 547,000 barrels per day. The news, combined with renewed concerns over US economic growth, led to a session dominated by oversupply fears. West Texas Intermediate (WTI) fell 1.54%, or US$1.04, to close at US$66.29, while Brent crude dropped 1.51% to US$68.62.
Losses were somewhat contained after US President Trump threatened to impose 100% secondary tariffs on countries purchasing Russian oil—singling out India after Indian officials indicated they would continue importing Russian crude despite US pressure.
Gold prices edged higher, supported by expectations of lower interest rates. The precious metal gained US$10.11 to close at US$3,373, up 0.30%. Silver also rose, adding 1.01% to reach US$37.41. Bitcoin advanced to trade at US$115,179.
Copper prices increased in London, climbing US$56 to US$9,687 per tonne—a gain of 0.58%. Traders remained focused on developments in Chile, where an earthquake temporarily halted operations at the El Teniente mine. The mine is responsible for a quarter of Chilean mining giant Codelco’s output, and any prolonged disruption may lead to supply concerns.
Iron ore also moved higher, building on gains from the Asian session. It closed at US$102.40 in New York, marking a 1.9% rise since the weekend.
Economic Calendar
AU:
- ANZ-Indeed Job Advertisements (Jul) – 11.30am
China:
- Caixin Services/Composite PMI’s (Jul) – 11:45am
US:
- Trade Balance (Jul) – 10:30pm
- ISM Services PMI (Jul) -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.
