Good morning. US markets were closed on Friday for Independence Day, so the overnight lead came from Europe and the commodity and currency markets. The Stoxx 600 rose 0.7 per cent to 653, capping its best week since May. Gold rose 1.8 per cent to US$4,187 an ounce, up 25.7 per cent over the past year, after June US payrolls of 57,000 undershot the roughly 110,000 economists expected and cooled bets on a near-term Federal Reserve rate rise. The US dollar eased, its index down 0.5 per cent over five sessions to 100.86, and the Australian dollar rose 0.4 per cent to US69.43 cents.
Wall Street closed on Thursday with the S&P 500 at 7,483, up 20.2 per cent over the past year, though the advance is narrow and richly priced. Analysts' 2026 profit forecasts are rising at their fastest pace since the pandemic rebound, which the Financial Times reports has stirred talk of an earnings bubble. Copper rose 1.8 per cent to US$13,722 a tonne, up 22.1 per cent over the year. Brent crude rose 0.5 per cent to US$72.13 a barrel, and Citi forecasts a fall toward US$60 to US$65 by year-end as Strait of Hormuz shipping normalises.
Locally, the ASX 200 last stood at 8,724 and the 10-year government bond yield at 4.80 per cent, up 68 basis points over the year, with the RBA cash rate held at 4.35 per cent. Gold's strength supports the producers Northern Star Resources and Evolution Mining, while iron ore at US$98.25 a tonne, down 2.1 per cent over five sessions, is a drag for BHP and Rio Tinto. Australia's housing market is cooling, with first-home buyers holding back as higher rates weigh on borrowing power.
The RBA cash rate is held at 4.35 per cent, unchanged on the day and 50 basis points higher over 12 months; the US 10-year sits at 4.48 per cent, up 4 basis points.
Dwelling values have turned lower across the major capitals as the cash rate, 50 basis points higher over the past year at 4.35 per cent, erodes borrowing power.
The US dollar index eased 0.5 per cent over five sessions to 100.86; the Aussie is up 5.6 per cent over the past year.
Futures now imply about a 50 per cent chance of a near-term Fed rate rise, down from about two-thirds before the report; the next FOMC decision is due at the end of July and the June minutes are out this week.
Central banks bought a net 41 tonnes of gold in May, led by Poland at 18 tonnes and China at 10 tonnes, the World Gold Council reported.
Gulf oil exports jumped in June on record UAE flows, and Chinese independent refiners are buying discounted Middle East crude as supply rises.
Gold rose 1.8 per cent to US$4,187 an ounce overnight and is up 25.7 per cent over the past year.
Copper offset part of the drag, rising 1.8 per cent to US$13,722 a tonne and 22.1 per cent over the past year, a support for both miners' copper divisions.
Brent is up 4.8 per cent over the past year but has fallen back from its Middle East-conflict peak, and Citi forecasts a further fall toward US$60 to US$65 by year-end.
The insurer guided to premium growth near 2.7 per cent and investment income of A$750m to A$800m, down from A$1.23bn a year earlier, and flagged natural-hazard costs about A$250m above its A$1.77bn allowance.
The rebound in mergers and acquisitions has been led by EMEA, where announced deal activity picked up sharply.
Fidelity International, DCC's largest holder with 6.9 per cent, said the offer does not reflect fair value and it would not accept below GBP70 a share; the bidders face a put-up-or-shut-up deadline of 8 July.
The allegation was made in London litigation brought by affected communities seeking clean-up and compensation.
Exxon's first-quarter net income was US$4.2bn, down 46 per cent on the year, and analysts expect its second-quarter profit to more than double as the Middle East disruption lifted prices.
“If businesses or households thought the Fed would accept inflation above 2 per cent, I guess they'd be disappointed. We're going to deliver price stability.”
“We can raise rates to address inflation without fear that the tightening itself becomes a source of financial stress.”
“The clearest sign of a bubble is not the price action but the surge in the earnings expectations that justify it. For me, today's optimism is yet another way in which 2026 is looking like 1999.”
“If we miss the window of opportunity in the next few years, we'll end up with fragmented national solutions for decades to come. We keep believing in European cooperation at Airbus.”
“The US economy remained resilient, with consumers still earning and spending and businesses still healthy.”
“Our AI business at AWS is already a multibillion-dollar business growing at a triple-digit year-over-year percentage.”
For wholesale clients only. Prepared by Arc Point OCIO Pty Ltd (ACN 693 569 765), Corporate Authorised Representative (CAR 1319046) of Capella Advisory (AFSL 550125), for wholesale clients within the meaning of the Corporations Act 2001 (Cth); it is not intended for, and should not be relied on by, retail clients. This note is factual market reporting and general information, with any arcpoint view clearly labelled as such. It is not personal advice and does not take into account any person's objectives, financial situation or needs. Information is drawn from sources believed to be reliable but its accuracy and completeness are not guaranteed. Past performance is not a reliable indicator of future performance.
Sources: Yahoo Finance, FRED, RBA, company filings.