United States
Wall Street ended a volatile session little changed after the Federal Reserve delivered its second consecutive rate cut, but Chair Jerome Powell downplayed the likelihood of another move in December. His comments revealed divisions within the committee, tempering expectations for further easing and prompting a swift reaction across markets. The S&P 500 finished flat, the Dow slipped 0.2%, while the Nasdaq rose 0.4%. Bond yields jumped, with the two-year Treasury yield climbing 11 basis points to 3.6% and the 10-year reaching 4.07%. The US dollar strengthened against major peers, and the VIX volatility index edged up to 16.98.
Mega-cap technology stocks provided some support, as Nvidia became the first US$5 trillion company. Microsoft reported a 22% rise in quarterly profit to US$30.8 billion on strong cloud revenue, while Alphabet posted revenue of US$102.4 billion, beating estimates. Meta, however, dropped more than 7% after warning of higher costs in 2026 despite quarterly revenue gains. Boeing also weighed on sentiment after a US$4.9 billion charge and a delay to its 777X jetliner program.
Corporate updates reflected mixed earnings momentum: Caterpillar exceeded expectations amid strong AI-related power-equipment demand, Starbucks posted positive same-store sales growth, while Chipotle trimmed guidance, citing consumer softness. CVS Health raised its profit outlook for a third time in six months, and SK Hynix reported a 62% jump in profit thanks to robust AI-driven chip demand.
Investors are balancing Powell’s caution with ongoing corporate resilience, leaving markets uncertain ahead of the Fed’s final meeting of the year.
Spike in Intraday Vol on s&P500 Following Rate Decision
Europe
European markets were muted, with the Stoxx 600 slipping 0.06% as investors digested a heavy earnings slate. Banking stocks led gains after Deutsche Bank surged 4.9% on stronger-than-expected earnings, while Santander climbed 4.1% and HSBC reached record levels. The sectoral outperformance lifted overall sentiment in financials despite broader weakness across chemicals, telecom, and media shares.
The basic-resources index gained 1.7% as copper prices hit a record high, lifting Glencore, Rio Tinto, and Anglo American. Energy names also advanced, led by BP and Shell, supported by firmer oil prices. Auto manufacturers rallied with Mercedes-Benz after a strong third-quarter report and Stellantis rising on renewed optimism for margins.
In contrast, technology stocks underperformed as SAP and RELX fell, while consumer discretionary names such as Adidas and BIC slumped following weaker guidance. Defensive sectors, including utilities and healthcare, showed relative strength — GSK and AstraZeneca advanced after upbeat results.
Bond markets were little changed, with Germany’s 10-year yield steady at 2.62%, while Britain’s 10-year held around 4.39%.
Australia
Australian share futures point to a soft open, with the ASX 200 expected to fall 0.4% to 8,908, tracking the subdued lead from Wall Street. Investors will be watching quarterly results from Coles, IGO, Lynas Rare Earths, and Mineral Resources, along with annual meetings at JB Hi-Fi, James Hardie, and Healius.
JB Hi-Fi reported strong group sales to start fiscal 2026, led by a 39.3% surge in New Zealand and 6% growth in Australia, while appliance brand The Good Guys rose 2.5%. The company said performance was in line with expectations heading into the key holiday trading period. IGO Limited also posted a steady quarter with improved cash flow, closing with $287 million net cash as higher refinery output offset weaker lithium mine production.
James Hardie shareholders ousted chair Anne Lloyd after the controversial Azek deal, though the company maintained it will continue pursuing long-term growth initiatives. Meanwhile, Macquarie Group is reportedly exploring the sale of its Polish fibre-broadband unit, and Rio Tinto’s CEO Kellie Trott announced plans to streamline the miner’s global operations.
Australian bond yields followed the US higher, with the 10-year rising to 4.22% and the 3-year climbing 12 basis points to 3.57%. Traders are pricing out near-term rate cuts after the latest CPI data surprised on the upside, reinforcing expectations that the RBA will remain on hold into 2026.
Commodities and currencies
In commodities, Brent crude rose 0.7% to US$64.86 a barrel and WTI added 0.3% to US$60.36. Gold slipped 0.2% to US$3,942 an ounce, while iron ore gained 1.2% to US$107 a tonne. Copper prices touched record highs amid tightening supply expectations.
The Australian dollar traded 0.2% lower at US65.70¢, reflecting US dollar strength following Powell’s remarks. The euro weakened 0.5% to US$1.1596, and sterling eased 0.6% to US$1.3187. Bitcoin fell 1.4% to US$111,109, and ether slipped 1.7% to US$3,911.
Economic Calendar
US:
- Initial Jobless Claims Oct 23:30
- Continuing Claims Oct 23:30
- GDP Annualised QoQ 23:30
- Personal Consumption 3Q 23:30
EU:
- GDP SA QoQ 21:00
- GDP SA YoY 21:00
- ECB Deposit Facility Rate Oct 00:15
- ECB Main Refinancing Rate Oct 00:15
- ECB Marginal Lending Facility Oct 00:15
This article was written by James Woods, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
