United States
US equity markets gained ground overnight as softer-than-expected inflation data and a strong 30-year Treasury auction bolstered confidence that the Federal Reserve has scope to cut rates if economic conditions deteriorate. The S&P 500 climbed 0.4% to its highest close since 20 February, finishing just shy of a new all-time high, while the Nasdaq and Dow both advanced 0.2%. Optimism around the rate outlook offset geopolitical jitters, following reports that Israel is weighing military action against Iran.
Investor sentiment was buoyed by a cooler-than-forecast reading on wholesale inflation. The producer price index (PPI) rose just 0.1% in May, below the 0.2% consensus estimate, while core PPI also posted a 0.1% increase. This marks the second straight day of soft inflation readings, reinforcing expectations that the Fed could cut rates later this year should economic momentum fade. The US dollar weakened to a three-year low in response, fuelling further gains across equities and commodities.
Long-dated US Treasuries rallied after a solid $22 billion auction of 30-year bonds, with yields briefly approaching 4.8% before easing. Treasury Secretary Scott Bessent noted that the long-term impact of Republican tax cuts may reduce borrowing needs over time, tempering concerns around fiscal deficits. Analysts highlighted that the Fed now has room to “sit on its hands,” with market pricing indicating a growing likelihood of a September rate cut and two reductions by year-end.
Oracle surged to a record high on the back of a strong sales outlook, while corporate insiders were seen exiting positions at the fastest pace since November, signalling some caution beneath the surface. Meanwhile, President Donald Trump reiterated his criticism of the Fed, said he won’t replace Jerome Powell, and floated the idea of hiking tariffs on imported cars to support domestic auto manufacturing—a move that sent shares of GM, Ford and Stellantis lower.
Europe
European equities finished lower as renewed US trade threats and fading momentum from Wall Street’s inflation-fuelled rally dragged sentiment. The Stoxx Europe 600 slipped 0.3%, marking a third straight session of weakness. Travel and leisure stocks led declines, pressured by another monthly drop in US airfares and ongoing demand concerns. Deutsche Lufthansa and EasyJet both shed nearly 4%, while retail giant Tesco bucked the trend, rising 1.6% after posting stronger-than-expected sales.
Traders expressed concern over President Trump’s comments that he may set unilateral tariff rates on European imports within two weeks, escalating uncertainty over the stalled US–EU trade negotiations. Commerce Secretary Howard Lutnick stated the European Union is likely to be the last region to finalise a trade deal with Washington, as the administration prioritises pacts with Asia and Latin America.
Despite this, European equities have outperformed their US counterparts year-to-date, supported by ECB rate cuts, improving German economic data, and continued fund inflows. Deutsche Bank and Amundi SA noted a pickup in global allocations to Europe, as investors seek exposure to undervalued assets and policy-driven growth.
Still, the mood remains cautious. “Markets may not be fully pricing in the potential growth and inflation impact of fresh US tariffs,” warned Natixis CIO Benoit Peloille. Investors are awaiting CPI data from Germany and France later today, which could offer further insight into regional inflation dynamics ahead of the next ECB policy meeting.
Australia
Australian shares are set to rebound this morning, with ASX futures up 47 points or 0.6% to 8606. This follows a modest pullback on Thursday, where the S&P/ASX 200 fell 27 points, or 0.3%, to 8565.1 after touching a fresh record earlier in the week. Weakness in the mining sector and major banks weighed on the index, with iron ore-related names tracking lower commodity prices and lithium stocks facing profit-taking after recent strength.
BHP fell 1.8% to $38.34, Rio Tinto dropped 1.7%, and Fortescue slumped 3.4%. Mineral Resources slid nearly 8%, while Liontown Resources shed 3.5%. The broader All Ordinaries also dipped 0.3%, as cautious offshore leads and a rotation out of cyclical names dampened momentum.
One area of strength came from gold miners, as investors moved into safe havens amid rising tensions between the US and Iran. Northern Star added 1.2%, while Newmont surged 3% on global buying. President Trump said he is growing less confident in Iran’s willingness to halt uranium enrichment, while Iranian Defence Minister Aziz Nasirzadeh warned of retaliation if US strikes occur.
On the corporate front, Cettire plunged 31.2% after CEO Dean Mintz flagged slowing demand in the US market. Monash IVF jumped over 9% following the resignation of its CEO, amid fallout from a second embryo transfer incident. Cochlear gained 0.7% despite trimming earnings guidance, while Myer and Johns Lyng both declined.
Investors will be eyeing the release of May’s BusinessNZ manufacturing PMI this morning for clues on economic momentum. The local bond market saw the 10-year yield close at 4.23%, while Commonwealth Bank fell 0.5% and Macquarie dropped 1.6%, reflecting broader weakness in financials.
Commodities
Commodity markets remained active overnight, with Brent crude reversing early losses to edge up 0.4% to 70.06 USD a barrel. Oil had traded modestly lower for much of the session as traders assessed Trump’s warnings of a “massive conflict” between Israel and Iran. While he said such a conflict was not imminent, geopolitical risk kept energy markets supported.
Gold advanced 0.9% to 3386.45 USD an ounce, extending its rally on the back of lower yields and safe-haven flows. Iron ore fell 0.7% to 94.45 USD per tonne, with analysts citing ongoing weakness in Chinese steel demand. Copper and silver remained broadly stable.
The Australian dollar gained 0.5% to 65.30 US cents, buoyed by a softer greenback and improving risk sentiment in Asia. Bitcoin fell 2.8% to 106,159 USD in volatile trade. Meanwhile, bond yields eased across the board, with the US 10-year closing at 4.36% and Australia’s equivalent at 4.23%.
Traders will be watching the University of Michigan’s preliminary June sentiment report tonight for further clues on US consumer behaviour and inflation expectations.
Economic Calendar
US:
- University of Michigan Consumer Sentiment (June) 00:00
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
