United States
Wall Street powered to fresh record highs overnight, with the S&P 500 breaking decisively above the 6,600 mark for the first time. Investors are positioning ahead of the US Federal Reserve’s highly anticipated policy decision later this week, widely expected to deliver the first interest rate cut since Donald Trump entered the White House. Traders are now shifting their focus away from the certainty of a September cut and toward the pace of reductions into 2026, with many betting on a series of moves aimed at supporting growth as the labour market shows further signs of cooling.
Technology shares once again set the tone for the session. Alphabet surged past a landmark US$3 trillion valuation, joining an exclusive club of mega-cap companies, after a sharp 4.8 per cent rise. Tesla was another standout, erasing its year-to-date losses after Elon Musk disclosed a US$1 billion share purchase, his first major buy in over five years. The move sent Tesla stock surging more than 6 per cent as investors interpreted the purchase as a strong vote of confidence in the company’s prospects despite recent sales softness. Sentiment across the sector was helped further by reports of a framework agreement that could keep TikTok operating in the United States, a politically sensitive issue that President Trump plans to raise directly with China’s Xi Jinping later this week.
Bond markets also reinforced the rally. Treasury yields drifted lower, with the two-year yield hovering near its weakest levels since late 2023. The 10-year yield eased to just above 4 per cent, underscoring expectations of imminent easing. The US dollar lost ground across major currency pairs, while equity strategists noted that the Fed’s commentary on jobs and inflation will be critical in setting the tone for the remainder of the year. Investors are bracing for Fed Chair Jerome Powell’s press conference and the updated “dot plot” projections, which could either validate the market’s optimism or temper expectations for aggressive policy action.
Europe
European equities tracked the upbeat global mood, with the region’s benchmark Stoxx 600 adding 0.4 per cent. Gains were concentrated in cyclical and growth-oriented sectors, though the rally was uneven across industries. Defence names advanced strongly after reports of Russian drones entering Romanian airspace, bolstering shares in Rheinmetall, Airbus, and Rolls-Royce. Luxury and consumer goods also attracted buyers, led by LVMH and Richemont, as investors rotated back into high-end discretionary spending plays.
Technology was another bright spot, with semiconductor stocks enjoying renewed demand after Beijing announced new investigations into the US chip sector. ASML jumped nearly 6 per cent, its best session in months, while ASM International also posted outsized gains. However, not all tech fared well: SAP slumped close to 3 per cent as investors leaned into a long-short rotation trade favouring rival Oracle. Meanwhile, AstraZeneca tumbled after a broker downgrade weighed on healthcare names more broadly.
Banks and financials contributed meaningfully to the advance. UBS climbed more than 2 per cent ahead of a crucial Swiss vote on capital requirements, while Barclays and ABN Amro both gained on restructuring and cost-cutting plans. Still, food producers and consumer staples lagged, with declines in Nestlé and Diageo reflecting investor caution toward defensives. Overall, Europe’s performance underscored a continued appetite for risk as markets awaited clarity from the Fed.
Australia
Australian equities are set to open on the front foot, with futures pointing to a rise of around 0.5 per cent at the open. The positive lead from Wall Street, combined with strength in local resource names, provides a supportive backdrop for the S&P/ASX 200 as it looks to extend its recent gains.
In corporate news, CSL dominated headlines after announcing a US$760 million investment in Dutch biotech firm VarmX. The deal represents the healthcare giant’s most significant strategic move since unveiling large-scale cost reductions earlier this year. CSL will make an upfront payment to fund late-stage trials of a bleeding disorder treatment, with an option to acquire the company outright ahead of an expected commercial launch in 2029. Investors will be watching closely for how this investment reshapes CSL’s long-term R&D strategy.
The dividend season continued to deliver. Gold Road Resources surprised shareholders with a fully franked special dividend of 43¢ per share, to be paid in October. Coal miner New Hope reported a net profit of $439.4 million, down slightly from the previous year, but supported its result with a fully franked 15¢ dividend. Elsewhere, Qantas may be in focus as Sydney Airport unveiled a major terminal expansion aimed at accommodating a surge in passenger numbers, signalling continued optimism in travel demand recovery.
Resource giants remain centre stage. BHP was downgraded by BNP Paribas Exane, which cautioned that its recent outperformance may be difficult to sustain, particularly given moderating commodity prices. Rio Tinto, meanwhile, drew interest as it joined forces with Mercuria in bidding for a copper smelter in Chile, highlighting its ongoing appetite for strategic acquisitions in key base metals.
Commodities and currencies
Gold prices extended their march higher, touching US$3,680 an ounce, supported by expectations of looser US monetary policy and persistent safe-haven demand. Oil also edged higher, with Brent crude advancing to US$67.45 a barrel amid ongoing concerns about Russian supply and geopolitical disruptions. West Texas Intermediate crude traded near US$63, reflecting steady underlying demand even as inventories fluctuate.
Base metals presented a mixed picture. Aluminium and copper prices rose on optimism surrounding supply constraints, while iron ore eased to around US$105 a tonne following weaker Chinese economic data. Analysts noted that despite the dip, sentiment in iron ore markets remains underpinned by resilient steel demand and Beijing’s ongoing policy support.
In currencies, the Australian dollar strengthened to US66.70¢, benefiting from the risk-on tone in global markets and rising commodity prices. The euro firmed to US$1.176, while the US dollar weakened broadly as traders positioned for policy easing. Among cryptocurrencies, bitcoin slipped 0.4 per cent to roughly US$115,300, while ether dropped 2.7 per cent to just under US$4,500, reflecting renewed volatility across digital assets.
Economic Calendar
US:
- Retail Sales Advance MoM 22:30
- Import Price Index MoM 22:30
- Industrial Production MoM 22:30
- Capacity Utilisation Aug 23:15
EU:
- ZEW Survey Expectations Sep 19:00
This article was written by James Woods, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
