United States
US stocks continued to climb on Monday, with the Nasdaq and S&P 500 both closing at record highs. Optimism around trade negotiations helped drive the gains after Canada announced it would suspend its digital services tax targeting US tech companies. The move has revived trade talks between the two countries, with leaders aiming to finalise a deal before July 21—an extension from the previously imposed July 9 deadline.
The major indices posted modest gains. The Dow Jones Industrial Average rose 275 points (0.63%) to close at 44,094. The Nasdaq Composite added 0.48% to reach 20,369, while the S&P 500 gained 31 points, or 0.52%, to close at 6,204.95. Nine of the S&P 500’s eleven sectors finished higher, led by technology and financials. Consumer discretionary was the weakest sector on the day.
In other trade-related developments, Treasury Secretary Bessen warned that initial tariffs could still be imposed on certain countries, even if they are negotiating in good faith. Meanwhile, attention also turned to the US administration’s tax bill, which President Trump is pushing to pass through the Senate this week. The proposed legislation is projected to add $3.3 trillion to the national debt over the next decade. In a note released Monday, investment firm BlackRock cautioned that the rising debt burden may weaken investor appetite for government bonds and poses the greatest threat to the US’s privileged status in the global financial system.
Bond yields declined, with the 10-year Treasury yield falling 5 basis points to 4.23%, and the 2-year yield down 3 basis points to 3.72%. The US dollar resumed its slide, dropping 0.48% on the Bloomberg US Dollar Index and closing the quarter at its lowest level in over 39 months.
In equity news, major US banks advanced after successfully passing the Federal Reserve’s annual stress tests. These assessments ensure that banks have sufficient capital to withstand severe economic shocks. Institutions that fail the tests face restrictions on dividends and share buybacks. As a result of the positive outcome, analysts now anticipate increased capital returns. Goldman Sachs rallied 2.45% to a record high, while Citigroup gained 0.88%.
Looking ahead, investors will focus on labour market data during the holiday-shortened week. The JOLTS job openings report is due later Tuesday, and further remarks from Federal Reserve Chair Jerome Powell are also anticipated today.
Europe
European equities started the week in the red, with a broad-based selloff dragging the Euro Stoxx 600 down 0.42% to close at 541.37. Nine of the index’s eleven sectors declined, led by materials and energy. The UK’s FTSE 100 mirrored the weakness, falling 0.43% to finish at 8,760.
Healthcare stocks also came under pressure. Shares of UK pharmaceutical giant GSK dropped 1.10% after a US senator launched an investigation into a discontinued asthma inhaler for children previously supplied by the company. Meanwhile, Bayer slid 5.34% after the US Supreme Court asked the Justice Department to weigh in on Bayer’s appeal related to its Roundup weedkiller, which has been linked to cancer and could potentially limit the company’s liabilities.
On the economic front, preliminary data showed German inflation easing to 2.7% in May. Today, the Eurozone’s inflation reading is expected to come in at 2.0%—in line with the European Central Bank’s target. The data has reinforced expectations of a potential rate cut in September, assuming no external shocks emerge.
Bond markets were relatively muted. German 10-year bond yields edged up 1 basis point to 2.60%, while UK 10-year yields dipped 1 basis point to 4.49%. The euro remained strong, with the EUR/USD hovering near multi-year highs at 1.178.
Australia
Australian shares ended the financial year on a positive note, with the ASX 200 rising 0.33% on Friday, gaining 28 points to close at 8,542.30. For the full financial year, the index delivered a strong return of 9.98%, recovering from a sharp drawdown in early April following market disruptions caused by the initial announcement of new tariffs from the US administration.
Monday’s gains were led by the healthcare sector, with seven of the eleven industry sectors finishing higher. CSL reversed Friday’s losses, advancing 2.19% to close at $239.48. Cochlear also climbed, rising 1.69% to $300.42, as investors saw value emerging in the sector.
The financial sector rose 0.47%, although the big four banks posted only modest movements. In contrast, Macquarie Group extended Friday’s gains, jumping 3.87% to $228.73, supported by increasing investor appetite for risk assets amid growing optimism over trade negotiations. Health insurer NIB surged 9.43% to $7.08 after receiving broker upgrades to a ‘buy’ rating. Medibank also rose, gaining 1.41%.
The largest move among large-cap stocks came from James Hardie, which jumped 7.06% after US rival AZEK shareholders approved the companies’ proposed merger. Materials stocks were mixed—bulk miners gave back some of Friday’s gains, while gold miners edged higher following a small rebound in the gold price. Chinese Purchasing Managers’ Index data showed a slight improvement over expectations but had limited impact on prices.
Bond yields moved higher, with the Australian 10-year yield rising 3 basis points to 4.16%. The Australian dollar traded quietly, ending the session at 0.6535 in Sydney.
In overnight trading the AUD moved higher against the USD as the US dollar weakened and begins the day at 0.6577. The ASX 200 futures drifted lower by 6 points the equivalent of 0.07%.
Commodities
Oil prices edged lower on Monday as traders assessed weekend reports suggesting that OPEC+ may increase production in August, while also monitoring developments in the Middle East. West Texas Intermediate (WTI) fell 0.63% to close at US$65.11, while Brent Crude slipped 0.30% (20 cents) to US$66.60. Adding to supply concerns, US Energy Information Administration (EIA) data showed that US crude production reached a record high in April.
Gold advanced as the US dollar weakened, making the metal more attractive to non-US investors. Gold rose by US$28.81, or 0.88%, to close at US$3,303. Silver was slightly higher, closing at US$36.11.
Bitcoin remained range-bound, trading at US$107,388—slightly lower than its weekend close.
Iron ore was largely unchanged, ending the session at US$94.15, a modest move of just 5 cents. Economic data out of China offered a mixed picture. While the broader Purchasing Managers’ Index (PMI) slightly beat expectations, the manufacturing PMI remained below 50, indicating continued contraction. This tempered hopes for additional government stimulus, despite some signs of stabilisation.
Copper declined by US$9 to US$9,869 per tonne on the London Metal Exchange, as traders awaited further clarity on Chinese demand. Markets are now focused on today’s release of the Caixin Manufacturing PMI, which may offer a different perspective on the state of China’s industrial activity.
Economic Calendar
China:
- Caixin Services/Manufacturing/Composite PMI (Jun) – 11:45am
EU:
- Inflation Rate –Flash (Jun) – 7:00pm
US:
- Fed Chairman Powell Speech – 11:30pm
- ISM manufacturing Index (Jun) – 12:00am
- Construction Spending (May) – 12:00am
- JOLTS Job Openings (May) – 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.
