United States
Wall Street ended the week on a sour note, with US equities suffering their steepest losses in over two months. The S&P 500 tumbled 1.6%, the Nasdaq 100 dropped 2%, and the Dow Jones Industrial Average shed 1.2%. The small-cap Russell 2000 fell 2%, reflecting broad risk-off sentiment across asset classes.
At the centre of the selloff was a deeply disappointing US jobs report. Non-farm payrolls rose by just 73,000 in July — well below the 100,000 expected — while prior months were revised down by a combined 258,000. Over the past three months, jobs growth has averaged just 35,000, marking the weakest run since the pandemic. The unemployment rate edged up to 4.2%.
Bond markets responded swiftly. The two-year Treasury yield plunged 28 basis points to 3.68% — the sharpest one-day drop since 2023 — while the 10-year yield fell 16 basis points to 4.22%. Markets are now fully pricing in two rate cuts in 2025, with a 90% chance of the first in September.
Compounding market concerns was a fresh wave of political instability. President Donald Trump intensified pressure on the Federal Reserve, calling for immediate rate cuts and demanding Chair Jerome Powell be “put out to pasture.” Trump also fired the head of the Bureau of Labor Statistics after the report’s release, alleging political bias in the data.
The volatility index (VIX) jumped 22%, rising above 20 for the first time in weeks. Tech stocks led the decline, with Amazon tumbling 8.3% after issuing a weak profit outlook. All of the so-called “Magnificent Seven” ended the session in the red, including Meta (-3%) and Apple (-2.5%), despite the latter reporting its strongest revenue growth in over three years.
Europe
European equities fell sharply on Friday, echoing Wall Street’s slide and registering their worst session since April. The Stoxx Europe 600 dropped 1.9%, with all sectors ending in negative territory. France’s CAC 40, Germany’s DAX, and Italy’s FTSE MIB each fell more than 2.5%.
US economic concerns and Trump’s renewed tariff push weighed heavily on European markets. A surprise 39% levy on Swiss imports added to uncertainty, even as the Swiss stock exchange remained closed for a public holiday.
Healthcare stocks were among the worst performers after Trump demanded that major global pharmaceutical companies — including Novo Nordisk and Pfizer — slash their prices for Medicaid-covered drugs. Novo Nordisk fell 1.8%, AstraZeneca dropped 1.9%, and GSK declined 1.5%.
Technology shares also tracked US counterparts lower, as disappointing earnings from Amazon cast a shadow over the sector. ING’s Vincent Juvyns noted the initial optimism around European equities had faded, warning that “higher tariffs and softer US demand could weigh on earnings in coming quarters.”
Australia
The Australian sharemarket closed modestly lower on Friday, with the S&P/ASX 200 falling 0.92% to 8662. For the week, the index was largely flat, down just 0.1%. However, futures are pointing to a weaker open today, with SPI contracts down 33 points, or 0.4%, following the sell-off on Wall Street.
Technology and financials led losses on Friday. Xero fell 3.2%, Life360 lost 3.1%, and WiseTech dropped 2.4%. Among the major banks, CBA slid 1.6%, NAB declined 1.3%, and Westpac was down 1%, while ANZ bucked the trend with a 0.7% gain.
In the resources space, iron ore futures rose 0.8% to USD 100.60/tonne, helping Fortescue gain 1.5% and BHP lift 0.1%, while Rio Tinto dipped 0.7%. Mineral Resources rallied 4.4% after rebounding from a 7% fall the previous day.
Corporate results offered a mixed picture. Star Entertainment plunged 16.4% to a record low after the collapse of a major asset sale. ResMed rose 1% on stronger-than-expected earnings, while Novonix fell 4.4% after cancelling plans to spin off graphite assets.
Investors now turn their attention to Australia’s August earnings season, with reports from Beach Energy, Credit Corp, Pinnacle, AMP, Block, Nick Scali and QBE scheduled this week. While global headwinds persist, some fund managers remain cautiously optimistic. TenCap’s Jun Bei Liu said she expects this to mark the bottom of corporate earnings, with a more positive outlook over the next 12 months.
With rate cut expectations now firmly back on the table, investors face a tricky balancing act. Slowing growth is forcing central banks to consider easing, but persistent inflation and geopolitical uncertainty may limit how far they can go. Locally, earnings season will take centre stage this week, providing a timely read on the health of corporate Australia amid global volatility.
Commodities
A shift to defensive assets saw gold surge 2.2% to USD 3,363.48 an ounce, its highest in weeks, as geopolitical tensions and weak jobs data prompted risk aversion. Oil prices were dragged lower by global growth concerns, with Brent crude falling 3% to USD 69.54 a barrel and WTI down 2.8% to USD 67.31.
Currency markets reflected a sharp unwinding of US dollar strength. The greenback snapped a six-day rally, with the Bloomberg Dollar Spot Index dropping 0.9%. The Australian dollar rallied 0.8% to US64.74¢, while the euro jumped 1.4% to USD 1.1571. The yen rose 2.2% to 147.43 per dollar — its largest one-day gain in months — on safe-haven flows.
Cryptocurrencies joined the risk-off move, with Bitcoin falling 2.8% to USD 113,237 and Ether sliding 5.8% to USD 3,516.
Bond yields fell globally as markets reassessed central bank policy paths. Germany’s 10-year bund yield dropped two basis points to 2.68%, while the UK 10-year gilt yield fell four basis points to 4.53%. Australia’s 10-year yield stands at 4.31%, slightly above its US counterpart.
Economic Calendar
No major data
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
