United States
U.S. equity markets continued their record-setting rally on Thursday, with strong gains across major indexes. Both the Nasdaq and the S&P 500 closed at all-time highs, driven by solid corporate earnings and a rebound in retail sales data.
By the close, the Dow Jones Industrial Average added 0.52% to finish at 44,484. The Nasdaq Composite advanced for a fourth consecutive session, rising 0.74% (+153 points) to close at 20,884. The S&P 500 climbed 0.54%, gaining 33 points to end the day at 6,297. Nine of the eleven sectors in the S&P 500 posted gains, led by financials, while healthcare was the weakest performer, falling 1.18%.
PepsiCo surged 7.45% after reporting stronger-than-expected earnings, the company had previously lowered their forecasts last quarter due to tariff concerns. Taiwan Semiconductor Manufacturing rose 3.38% following a 61% jump in second-quarter profits, driven by strong demand for AI chips.
United Airlines gained 3.11% after beating second-quarter earnings estimates. Despite lowering its guidance for the third quarter, investors responded positively to comments from the CEO highlighting a rebound in travel demand after a sluggish start to the year. The upbeat sentiment lifted other airline stocks as well.
In after-hours trading, Netflix shares rose 1.91% following its earnings announcement. The streaming giant reported 16% revenue growth in the second quarter but warned of potential margin pressures going forward.
June retail sales increased by 0.6%, well above the forecasted 0.1% rise. While some analysts noted the growth was partly due to price increases from tariffs rather than higher volumes, the data still suggested resilience in U.S. consumer spending amid economic uncertainty.
Weekly jobless claims also reflected strength in the labour market, with filings falling by 7,000 to 221,00.
Bond yields remained steady. The 10-year Treasury yield held unchanged at 4.45%, while the 2-year yield ticked up 2 basis points to 3.91%. Market expectations for a rate cut remain focused on later in the year. Supporting this view, Federal Reserve Governor Kugler stated that rate cuts should remain on hold until the impact of tariffs becomes clearer, in remarks delivered at a housing forum in Washington.
The U.S. dollar continued to strengthen, rising 0.30% on the Bloomberg U.S. Dollar Index. Looking ahead, attention will turn to the University of Michigan’s consumer expectations data, due out today.
Europe
European markets advanced on Thursday, supported by stronger-than-expected earnings across several key sectors. The Euro Stoxx 600 rose 0.96% to close at 547.03, with nine of eleven sectors finishing higher, led by industrials and technology. In the UK, the FTSE 100 added 0.52% to close at 8,972.
Swiss engineering firm ABB soared 9.89% after reporting its largest-ever quarterly order book, driven by strong demand for infrastructure supporting AI data centres—particularly in the U.S., where the company manufactures approximately 80% of its products. French electrical equipment maker Legrand also rallied, gaining 8.9% after raising its sales targets, again citing AI-related infrastructure as a key growth driver.
Technology stocks rebounded following Taiwan Semiconductor’s earnings, with chipmaker ASML recovering 3.9% after a sharp drop the previous day prompted by a weak forward outlook. Other semiconductor stocks moved higher as the subsector index added 3.61%.
In bond markets, yields remained steady. Germany’s 10-year Bund yield edged down 1 basis point to 2.67%, while the UK 10-year gilt yield rose 1 basis point to 4.65%.
Australia
The Australian share market closed at a record high on Thursday, with the ASX200 gaining 77 points, or 0.90%, to finish at 8,639. Investor sentiment was buoyed by rising expectations of interest rate cuts following a surprise jump in the unemployment rate to 4.3%—its highest level since November 2021. Continued strength in iron ore prices also supported the market’s upward momentum.
The rally was broad-based, with all sectors finishing in positive territory. Interest rate-sensitive sectors, such as financials and real estate, outperformed. The standout sector of the day was industrials, driven by a 3% rebound in Computershare and a 3.40% gain in toll road operator Atlas Arteria.
Major banks also advanced, with Commonwealth Bank rising 1.82% and Westpac climbing 1.20% to $33.70. All large-cap financials ended the session higher. Among fund managers, Australian Ethical surged 7.4% to $6.68 after reporting a 34% increase in funds under management, reaching a record $13.94 billion. HUB24 added 3.22%, supported by positive broker commentary.
In the materials sector, Fortescue rose 0.30% and Rio Tinto gained 0.52%, as iron ore traded at US$100.86 in Asian markets. However, a retreat in gold prices pressured gold miners, while Lynas Rare Earths declined 2.90% as investors took profits following a recent rally.
Thursday’s unemployment data revealed a modest increase of just 2,000 jobs in June, well below expectations of a 20,000 gain. Full-time employment dropped by 38,200. The sharper-than-expected rise in the unemployment rate to 4.3% surprised markets, as the Reserve Bank of Australia had not anticipated reaching this level until the end of the year. Analysts were quick to criticise the RBA’s decision to hold rates at its last meeting. Tony Sycamore of IG commented, “There are clear signs of deceleration emerging in labour markets. This calls into question the RBA’s decision to prioritise inflation over growth and jobs earlier this month,” suggesting a policy shift may occur at the August meeting.
Bond yields fell in response, with the 10-year yield down 6 basis points to 4.34% and the 2-year falling 9 basis points to 3.35%. The Australian dollar also weakened, ending the Sydney session at 0.6468.
Overnight trading in ASX200 futures indicates a stronger start for the Australian share market today, with the index up 39 points, or 0.45%. The Australian dollar also strengthened overnight and begins today’s session at 0.6488.
Commodities
Oil prices surged on Thursday, driven by stronger-than-expected economic data and renewed geopolitical tensions in the Middle East. West Texas Intermediate (WTI) rose 1.87%, gaining US$1.24 to settle at US$67.62. Brent crude climbed 1.56% to close at US$69.59. Traders grew increasingly concerned about potential supply disruptions as drone strikes targeted oil fields in Iraqi Kurdistan for a fourth consecutive day.
Gold prices eased as a strengthening U.S. dollar weighed on foreign demand, with the precious metal falling 0.24% to close at US$3,338. In contrast, silver rebounded, rising 0.61% to US$38.14.
Bitcoin remained range-bound following last week’s surge, trading at US$119,696. On Thursday, the U.S. Congress passed a bill aimed at establishing a regulatory framework for cryptocurrencies.
Iron ore extended its rally, rising 1.20% to close at US$102 in New York—its highest level in six months—on renewed optimism about global economic growth. Copper also gained, adding US$32 (0.33%) to finish at US$9,666 per tonne.
Economic Calendar
US:
- Housing starts and Building Permits (Jun) – 10:30pm
- University of Michigan Consumer sentiment (Jul) – 12:00am
- University of Michigan Inflation Expectations (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.
