United States
Wall Street pulled back overnight as investors digested comments from Federal Reserve chairman Jerome Powell, who stopped short of signalling another rate cut in October. Powell reiterated that risks remain on both sides of the equation — inflation pressures on one hand, labour market fragility on the other — and warned there is “no risk-free path” for policy. His caution disappointed traders who had been hoping for a more dovish steer, especially after last week’s quarter-point cut.
The S&P 500 briefly touched 6,699 in early trade, within a whisker of the 6,700 mark, before slipping back once Powell spoke. It closed 0.6 per cent lower at 6,656.92, while the Dow lost 0.2 per cent and the Nasdaq shed 1 per cent. All of the so-called “magnificent seven” tech leaders ended in the red, with Nvidia off 2.8 per cent after its strong run the previous session. Still, enthusiasm for artificial intelligence continues to underpin the broader tech sector, and chipmaker Micron lifted spirits late in the session with an upbeat sales forecast that topped expectations.
Bond markets also reflected the more guarded outlook. Ten-year US Treasury yields eased four basis points to 4.11 per cent as investors sought safety. The pullback in yields has helped fuel what has already been a record month for corporate bond issuance, with US high-grade sales reaching US$172.3 billion — surpassing last year’s record with a week still to run. Companies such as Lowe’s and Enel tapped strong demand, taking advantage of tight spreads not seen since the late 1990s.
Beyond the Fed, politics remained in focus. President Trump pressed ahead with plans to secure a 10 per cent equity stake in Lithium Americas as part of a renegotiation of its US$2.26 billion loan for the Thacker Pass project. The mine, slated to be the Western Hemisphere’s largest source of lithium, is central to US ambitions for electric-vehicle battery supply. Shares in Lithium Americas soared nearly 80 per cent in after-hours trading.
Europe
European markets managed to end higher, with the Stoxx 600 up 0.3 per cent on the back of encouraging business activity data and sector-specific gains. Luxury houses such as LVMH and L’Oréal surged after a more optimistic revenue forecast from Bank of America, with the sector closing at a two-month high.
Retail was another bright spot. Kingfisher jumped more than 14 per cent after delivering a rare “beat-and-raise” update, sending the broader retail index to its strongest level since July. Automakers also rebounded after recent weakness, with Volkswagen and Mercedes both climbing more than 2 per cent despite mixed analyst ratings. Industrials had a steadier session, while basic resources ticked up as copper prices steadied and gold set another record.
Energy shares advanced after NATO warned of a “robust” response to Russian airspace incursions, pushing oil prices higher. BP, Shell and TotalEnergies all gained more than 1 per cent, while Equinor rose 3.2 per cent after beginning production from a new Norwegian gas field. On the flip side, health care lagged, dragged down by AstraZeneca, Roche and Novo Nordisk after a broker cut long-term forecasts for the GLP-1 drug market.
Australia
Futures point to a weaker open for local shares, with the SPI 200 down 31 points or 0.4 per cent to 8,852. The expected dip follows Wall Street’s retreat and comes ahead of today’s key inflation release at 11.30am AEST. Economists expect the CPI indicator to remain steady around 2.8 per cent year-on-year, though base effects and electricity rebates in New South Wales may distort the numbers. Traders are watching closely, as another firm print could make the Reserve Bank hesitant about cutting again before Christmas.
Corporate news is also in focus. Outdoor retailer KMD Brands reported a full-year net loss of NZ$93.6 million, weighed down by discounting and margin pressure, and declared no dividend. Rip Curl and Kathmandu eked out small sales growth, while US-based Oboz lifted 3.5 per cent, but group margins slipped to 56.5 per cent from 58.4 per cent. Management has promised a turnaround strategy, with early signs of recovery showing in August sales.
Elsewhere, Westpac announced it will axe 200 teller roles as part of a broader restructure, shifting resources toward digital channels and lending. The move comes amid plans to shed up to 2,000 roles across the bank. Meanwhile, reports suggest Santos and Shell are among the backers of a proposed domestic gas reservation scheme.
On the international front, Prime Minister Anthony Albanese will meet with President Trump in Washington on 20 October, while across the Tasman, New Zealand looks set to appoint its first female central bank governor. Local bond yields were mixed, with the 10-year slipping half a basis point to 4.26 per cent.
Commodities and currencies
In commodities, gold added 0.5 per cent to a fresh record of US$3,764 an ounce, buoyed by safe-haven demand. Oil prices extended gains, with Brent up 1.9 per cent to US$67.86 a barrel, reflecting heightened risks to Russian supply lines after recent strikes and NATO tensions. West Texas Intermediate traded around US$63.67. Iron ore slipped 0.6 per cent to US$106 a tonne, pausing after its recent climb.
Currency markets were little moved. The Australian dollar eased 0.02 per cent to US65.98¢, while the euro edged up 0.1 per cent to US$1.1815. The Kiwi dollar fell 0.2 per cent to US58.59¢. The Bloomberg Dollar Spot Index was broadly steady, reflecting Powell’s balanced tone.
Cryptocurrencies were mixed, with Bitcoin slipping 0.7 per cent to US$112,004, while Ether edged up 0.2 per cent to US$4,184.
Economic Calendar
AU:
- CPI YoY 11:30
US:
- MBA Mortgage Applications Sep 21:00
- New Home Sales Aug 00:00
This article was written by James Woods, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
