United States
Wall Street managed to post gains overnight despite Washington’s escalating political standoff. The S&P 500 closed 0.3% higher at a record 6,711.2 points, while the Dow Jones was little changed at 46,441.1. The tech-heavy Nasdaq also advanced 0.5%, helping lift a global benchmark of equities to fresh highs.
Traders appeared to shrug off the first US government shutdown in nearly seven years. With Congress failing to secure a funding deal, some 750,000 federal workers face furloughs, while others will work without pay. The shutdown threatens a blackout of key economic data that the Federal Reserve typically relies upon, including the all-important non-farm payrolls report due this week.
Private reports have taken centre stage. The ADP payrolls survey showed a surprise drop in private sector jobs in September, underscoring signs of a cooling labour market. At the same time, the Institute for Supply Management reported a seventh consecutive month of contraction in US manufacturing.
Treasuries rallied on the weaker data, with the 10-year yield falling 5 basis points to around 4.1%. Expectations for Fed rate cuts this year strengthened, with traders now pricing in at least two more reductions. The US dollar was steady, while gold continued its ascent as investors sought safety amid the fiscal uncertainty.
Europe
European equities closed at a record high, with the Stoxx 600 climbing 1.2% as drugmakers powered the advance. AstraZeneca surged more than 11% and Roche rose 8.6% after Pfizer secured a reprieve from threatened US tariffs on the pharmaceutical industry. The healthcare index booked its best session since 2008.
Steelmakers also enjoyed strong gains after Brussels unveiled plans to restrict foreign imports. ArcelorMittal rose 5.3% and SSAB jumped 8.6% as the EU looked to shield its industry from overseas competition. Conversely, defence stocks were weaker as leaders meeting in Copenhagen discussed how to respond to rising drone incursions across European airspace. Rheinmetall, Rolls-Royce, and BAE Systems all slipped.
The energy sector gained 1.7%, with Siemens Energy and Vestas both rallying on new project wins. Banks extended their recent run, while telecoms, media, and chemicals were more subdued. Notably, Tate & Lyle tumbled 13% after issuing a profit warning, making it the worst performer of the day. Overall, European markets showed resilience, even as political and security risks continued to dominate the headlines.
Australia
The local market struggled for direction on Wednesday, swinging between gains and losses before finishing marginally lower. The S&P/ASX 200 closed down 3.1 points, or 0.04%, at 8,845.7. Weakness in heavyweight BHP and consumer stocks offset strength in gold miners and utilities.
BHP fell 2.5% to $41.47 amid reports that China had temporarily banned imports of its Pilbara iron ore, sparking concerns over trade relations. Prime Minister Anthony Albanese urged both sides to resolve the dispute, which threatens around 3.5% of Australia’s total exports. By contrast, Fortescue rose 1.4% and Rio Tinto added 0.5%.
Gold was the standout sector as prices hit another record above US$3,875 an ounce. Westgold Resources soared 10.7% after unveiling plans to lift annual production by nearly 45% over the next three years. Other gold names, including Northern Star and Capricorn Metals, also firmed. Defensive utilities outperformed too, with AGL up 4.2% and Meridian Energy 4.3%.
Lithium stocks were heavily sold off after Chinese regulators approved fresh reserve reports in Yichun, raising the prospect of higher supply. Pilbara Minerals fell 6.4%, Liontown lost 10.7%, and IGO dropped 4.1%. Elsewhere, DroneShield extended its extraordinary run, leaping another 23% as investors bet on rising European defence spending. Corporate activity was also in focus: Eagers entered a trading halt before announcing a Canadian acquisition, while Bravura Solutions surged 18% on upgraded earnings guidance .
ASX futures this morning point to a 0.5% advance, with investors taking a cue from Wall Street’s positive lead
Commodities and currencies
Gold continued its safe-haven rally, climbing to a record US$3,875.53 an ounce. The precious metal has now risen nearly 47% this year, supported by central-bank buying, ETF inflows, and lower global interest rates. Silver gained 1.7% to US$47.43, while platinum and palladium also edged higher.
Oil prices remain under pressure. Brent crude slipped 1% to US$65.40 a barrel, extending a recent decline as traders assessed the risk of OPEC+ accelerating supply hikes into an already well-supplied market. West Texas Intermediate settled just above US$61.70 a barrel.
In currencies, the US dollar was steady, with the euro little changed at US$1.1730. The Australian dollar traded at US$0.6613 and the kiwi dollar at US$0.5817, both holding ground after recent volatility. Bitcoin rose 0.3% to US$117,893, while Ether slipped 0.4% to US$4,321.
Economic Calendar
AU:
- Trade Balance Aug 11:30
EU:
- Unemployment Rate Aug 19:00
US:
- Initial Jobless Claims Sep 22:30
- Continuing Claims Sep 22:30
- Factory Orders 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.
