United States
Wall Street kicked off February on solid footing, with all three major benchmarks posting gains as surprisingly strong manufacturing data bolstered confidence in Corporate America.
The S&P 500 advanced 0.7 per cent to 6,989.91, closing within striking distance of its all-time highs. The Dow Jones Industrial Average climbed 1.1 per cent to 49,459.64, while the Nasdaq 100 added 0.7 per cent. Small caps joined the party, with the Russell 2000 gaining 1 per cent as investors favoured economically sensitive sectors.
The standout catalyst was the Institute for Supply Management’s manufacturing purchasing managers’ index, which surged to 52.6 in January from 47.9 in December. The reading marked the strongest expansion since 2022, breaking a prolonged stretch of contraction that had plagued the sector for nearly a year. New orders showed solid gains, suggesting the recovery may have legs.
The upbeat data prompted traders to slightly pare back expectations for Federal Reserve rate cuts, with money markets now pricing the next reduction for July. The Fed paused its easing cycle last week, and the robust factory figures appear to give policymakers room to maintain a patient stance.
Treasury yields rose in response, with the benchmark 10-year climbing four basis points to 4.28 per cent. The Bureau of Labor Statistics will not release the January employment report on Friday as scheduled due to the partial government shutdown.
Walt Disney was the session’s notable laggard, tumbling 7.4 per cent after providing a tepid forecast for the current quarter and flagging headwinds to international visitors at its theme parks. After the bell, Palantir Technologies offered a bullish revenue outlook that should provide some support for tech sentiment heading into Tuesday’s session.
In corporate news, Elon Musk announced plans to merge SpaceX with his artificial intelligence venture xAI, creating a combined entity valued at approximately $US1.25 trillion. The deal highlights the billionaire’s increasingly ambitious and capital-intensive push into AI and space exploration.
Europe
European equities pushed to fresh record highs for the first time since mid-January, with the Stoxx 600 climbing 1 per cent as mining shares staged an impressive late recovery.
The mining subindex had slumped more than 3 per cent earlier in the session amid continued weakness in base metals prices, but it clawed back into positive territory as the gold rout moderated. Jeweller Pandora surged 9.2 per cent, benefiting from the sharp decline in silver prices.
Banks were the standout performers, rallying 2 per cent to close at their highest level since 2008. HSBC touched a record close, while Spanish lenders Santander and BBVA both gained 2.3 per cent, with BBVA also reaching record territory.
Travel stocks impressed, advancing 2.5 per cent as hotelier IHG jumped 4.2 per cent after being added to Goldman Sachs’ Conviction List. Telecoms climbed 1.7 per cent to their best levels since 2018, led by Deutsche Telekom and Nokia.
Healthcare added 1.3 per cent, with AstraZeneca gaining 3.2 per cent as its shares began trading on the New York Stock Exchange following a listing upgrade from Nasdaq.
Defence names faced selling pressure, with Rheinmetall dropping 2.9 per cent and BAE Systems falling 2.6 per cent following a downgrade. Luxury goods struggled as LVMH shed 1.6 per cent and Kering declined 2.1 per cent. Porsche weighed on the automotive sector after reports emerged the company is considering shelving an electric sports car line to rein in costs.
Australia
Australian shares are poised for a strong start to Tuesday’s session, with S&P/ASX 200 futures pointing 1 per cent higher to 8,815.
All eyes will be on the Reserve Bank, which is widely expected to lift the cash rate by 25 basis points when it delivers its policy decision at 2pm. The move would mark a departure from the global trend of monetary easing and reflects persistent inflationary pressures in the domestic economy. Governor Michele Bullock is scheduled to host a press conference at 3.30pm.
In regulatory news, Treasurer Jim Chalmers announced Sarah Court as the next chair of the Australian Securities and Investments Commission. Court has served as deputy chair and chief enforcer since June 2021 and will become the first woman to lead the corporate watchdog in its 35-year history.
Credit Corp reaffirmed its FY26 outlook after posting first-half profit of $44.1 million. The company highlighted a 23 per cent jump in US collections and lifted its full-year US investment guidance to between $US160 million and $US180 million.
Broker activity was busy, with UBS upgrading Charter Hall Group, GPT Group and Vicinity Centres to buy ratings. Barrenjoey lifted Evolution Mining to overweight, while Macquarie raised Elevra Lithium and Liontown to outperform and neutral respectively.
Commodities and currencies
The dramatic selloff in precious metals showed signs of stabilising, though gold still finished sharply lower for the session. Spot gold dropped 4.9 per cent to $US4,656 an ounce after briefly plunging as much as 10 per cent during Asian trading. The decline follows President Trump’s nomination of Kevin Warsh as the next Federal Reserve chair, with markets viewing him as more hawkish on inflation.
Oil prices tumbled as geopolitical risk premiums evaporated. Brent crude sank 4.4 per cent to $US66.30 a barrel and West Texas Intermediate fell 4.5 per cent to $US62.28 after Trump said Washington is in talks with Iran.
Iron ore eased 1 per cent to $US102.80 a tonne, while copper partially recovered from earlier losses as Chinese fabricators emerged to buy the dip ahead of the Lunar New Year holiday.
The Australian dollar slipped 0.2 per cent to 69.47 US cents as the greenback enjoyed its biggest two-day rally since April. The euro fell 0.5 per cent to $US1.1791, while the yen weakened 0.5 per cent to 155.58 per dollar.
Bitcoin gained 1.9 per cent to $US77,903.
Economic Calendar
AU:
- Building Approvals MoM Dec 11:30
- RBA Cash Rate Target 14:30
This article was written by Calvin Curdie, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
