Good morning. Wall Street closed July with shares and bond yields rising together. Amazon's results did the work on the equity side, and on the bond side a firmer reading on United States wage costs met three Federal Reserve officials arguing in public that rates need to go higher. All three had voted for a quarter-point rise at Wednesday's meeting, and all three chose Friday to explain themselves.
Closer to home, the local session was quiet and the news was not. Fortescue closed FY26 with record shipments and a write-down against its Iron Bridge magnetite project, and Origin Energy came in above the midpoint of its own guidance. HSBC agreed to sell its Australian home and personal loan book to funds managed by Blackstone and will shut every Australian branch inside 18 months, moving a large block of prime household lending off a bank balance sheet and into private credit.
Elsewhere, the Bank of Japan held with hawkish guidance while the United States Treasury told banks it may intervene to support the yen, and China's factory gauge fell back below the expansion line. United States payrolls land at the end of the coming week and will test whether the Federal Reserve's hawks have the data behind them.
The ASX 200 finished Friday's session up 0.1 per cent at 8,977, taking its gain over five sessions to 2.3 per cent. Materials led after touching an intraday gain of more than 3 per cent before fading, with BHP up 1.7 per cent, Rio Tinto up 0.9 per cent and Newmont up 3.4 per cent as copper and gold rose. Healthcare fell 1.9 per cent and consumer staples 1.3 per cent as traders took profits following a strong run. The Australian dollar was unchanged at US70.25 cents.
The S&P 500 rose 0.7 per cent to 7,490 in the overnight session, the Nasdaq 1.0 per cent to 25,374 and the Dow Jones 0.5 per cent to 52,485, a fourth consecutive monthly gain for the Dow. Amazon rose 15 per cent after lifting its 2026 capital spending plan and Apple fell 7 per cent on soft September-quarter guidance, the two moves roughly cancelling inside the index. The VIX fell 6.4 per cent to 15.99, Brent rose 1.2 per cent to US$90.12 a barrel and West Texas Intermediate 3.8 per cent to US$86.80, gold was unchanged at US$4,099 an ounce and the US dollar index eased 0.2 per cent to 99.80.
The Stoxx 600 closed the overnight session down 0.1 per cent at 649, the FTSE 100 down 0.3 per cent at 10,868 and the DAX up 0.1 per cent at 25,629, leaving the German index all but unchanged on the last trading day of the month. The euro held at US$1.1527, unchanged on the day and up 1.2 per cent over five sessions, after the July flash inflation reading came in firm enough to keep an interest rate rise from the European Central Bank in play.
In the prior session, the Nikkei 225 closed 4.0 per cent higher at 64,362 as Japanese chip and AI names followed Wall Street's rebound, with chip-testing equipment maker Advantest up 17 per cent and SoftBank Group up more than 15 per cent. At yesterday's mainland close the Shanghai Composite was up 0.7 per cent at 3,832 and the Hang Seng up 0.1 per cent at 25,884. South Korea's Kospi posted a record daily gain, capping an 18 per cent rise for July as investors returned to AI-linked shares.
House construction prices rose 2.0 per cent in the quarter, the largest quarterly increase since September 2022. No published consensus exists for this series. The reading sits against a June-quarter consumer price index of 3.8 per cent over the year, which suggests producers are absorbing part of the energy cost rather than passing all of it through.
The portfolio is mostly performing prime mortgages and credit card receivables from HSBC's Australian retail bank. Pepper Money will service the loans, completion is expected in the first half of 2027, and HSBC expects to book a loss of less than US$100 million. HSBC will keep its Australian private and institutional banking businesses. Blackstone describes it as the largest home loan portfolio transaction it has done globally.
The monthly pace has now stepped up for a second month. No published consensus exists for this series.
The currency usually tracks Chinese industrial demand, because China takes the bulk of Australia's iron ore. It held instead on a softer United States dollar, with the dollar index down 0.2 per cent on the day and 1.6 per cent over five sessions.
Wages and salaries rose 0.9 per cent and benefit costs 1.0 per cent from March. Inflation-adjusted wages and salaries for private industry workers fell 0.4 per cent over the year, the first drop in workers' purchasing power since 2022. The 10-year Treasury yield rose 8 basis points to 4.75 per cent, its highest since January 2025, and the 30-year rose about 4 basis points to 5.25 per cent.
Hammack said she is not confident inflation returns to target on its own and that businesses describe pricing pressures as broadening rather than fading. Kashkari pointed to the scale of data-centre investment as a new source of demand in the inflation outlook and argued a series of modest rises now reduces the risk of harder tightening later. Richmond's Tom Barkin said separately that it is a close call whether rates are already high enough.
Energy prices were 10.0 per cent higher than a year earlier, up from 8.5 per cent in June, and services inflation edged to 3.3 per cent from 3.2 per cent. Food, alcohol and tobacco slowed to 1.2 per cent from 1.5 per cent, and non-energy industrial goods rose to 0.9 per cent from 0.7 per cent. The energy component is the Iran conflict feeding straight into the headline.
Production fell to 49.9 from 51.4, new orders to 49.9 from 51.2 and new export orders to 49.0 from 50.1. The non-manufacturing index eased to 49.0. The National Bureau of Statistics attributed the fall to a high base after rapid growth in the prior period and the traditional off-season in some industries.
The yen had traded as low as 163.65 to the US dollar on Thursday, near four-decade lows, and stood at 157.40 by 7:15am AEST on Saturday, with the dollar down 1.7 per cent against it on the day and 3.8 per cent over five sessions. Treasury Secretary Scott Bessent said the yen appears very undervalued and that excessive volatility is not healthy for markets. Japan's top currency diplomat Atsushi Mimura said the United States support goes beyond psychological support.
The decision leaves Japan's policy rate roughly 250 to 275 basis points below the Federal Reserve's 3.50 to 3.75 per cent target range, the gap that has carried the yen toward four-decade lows and drawn intervention from both Tokyo and Washington this week.
One-year inflation expectations fell to 4.2 per cent from 4.6 per cent in June while five-year expectations were unchanged at 3.3 per cent. The index is still about 11 per cent below the 61.7 recorded a year earlier. Consensus is published for the preliminary reading, which beat the 51.0 economists expected, rather than for the final.
Separately, the Financial Times reported the same day that Ares secured the largest commitments to its flagship credit fund in three years. Both land in the week HSBC agreed to move A$36 billion of Australian household lending to Blackstone funds.
Hematite C1 costs were US$19.37 a wet metric tonne for FY26, about 2 per cent below expectations. Fortescue guided FY27 shipments to 197 to 207 million tonnes, a midpoint of about 202 million tonnes and broadly flat on the record year, with FY27 hematite C1 costs rising to US$20.50 to US$21.75 a tonne. Iron Bridge has never reached its 22 million tonne nameplate and is forecast at 11 to 14 million tonnes in FY27. The shares closed 1.9 per cent lower at $18.51 on Friday, taking their July fall to 3.5 per cent.
June-quarter Integrated Gas revenue rose 6 per cent on the March quarter to $1,964 million on higher LNG spot prices, and Origin took $911 million of fully franked dividends from Australia Pacific LNG over the year. Energy Markets added 243,000 customer accounts and Octopus Energy 2.2 million, and Origin now operates 980 megawatts and 3,408 megawatt hours of battery storage. FY27 Australia Pacific LNG production is guided to 625 to 670 petajoules, with capital and operating spending rising to $3.0 billion to $3.3 billion to offset field decline.
Fortescue's chief executive for growth and energy described the position on Friday's analyst call as trade friction that undermines the stable supply of iron ore to China. Fortescue declined the request to preserve the mill-level discounts. China's iron ore imports rose 15.3 per cent in June on May and 6.3 per cent over the first half on a year earlier, so the restrictions are grade-specific rather than a broad cut to buying.
Chevron's adjusted earnings were US$12.0 billion on cash flow from operations of US$19.7 billion excluding working capital, and it cut net debt by more than US$8 billion in the quarter, taking net debt to cash flow to 0.6 times. Chevron shares closed 0.2 per cent lower and ExxonMobil 2.9 per cent lower on Friday. Both results were lifted by the oil price rise the Iran conflict has driven, and United States lawmakers have begun questioning the size of the profits.
Chevron expects Kilby to deliver mid-teens returns on long-duration contracted cash flows that do not move with the oil price, and is targeting a final investment decision later this year with permitting and engineering under way. It said it is already in advanced discussions on further projects with existing and potential customers. Kilby is one of very few announced data-centre power projects at multi-gigawatt scale with a long-term customer commitment behind it.
Skyrizi sales were US$5.5 billion, up 24 per cent on an operational basis, and Rinvoq more than US$2.5 billion, up 23.7 per cent, while Humira fell 36.1 per cent to US$706 million on biosimilar competition. Neuroscience revenue was more than US$3.2 billion, up about 20 per cent. AbbVie has now lifted full-year revenue guidance by US$600 million since the start of the year.
Operating margins of 29.5 per cent fell 60 basis points on a year earlier, or 30 basis points excluding cost pass-through, which chief executive Sanjiv Lamba attributed mainly to the United States homecare business and said Linde is now assessing whether that business fits the portfolio. Third-quarter guidance is US$4.45 to US$4.55 a share, growth of 6 to 8 per cent. The new backlog work supports advanced-node semiconductor fabs in the western United States.
KKR reported record second-quarter results on Thursday, with adjusted net income up 40 per cent to US$1.5 billion, or US$1.63 a share, against a US$1.43 consensus. Terms of the Integer approach have not been disclosed and no agreement has been signed.
It follows BP's move, reported on 25 July, to sell its solar business Lightsource to a consortium of Qualitas Energy and Wren House, the infrastructure arm of the Kuwait Investment Authority. Both disposals narrow BP's portfolio toward its core oil and gas operations.
Citadel bought the bulk of the fund's public equity holdings, the Financial Times reported on Thursday. The losses were concentrated in the technology selloff that took the Philadelphia semiconductor index into a bear market in late July, before the AI names rebounded this week.
The filing comes as United States electricity demand from data centres pushes utilities toward new generation. The Financial Times reported the same day that a bidding war has opened for United States coal plants driven by the same demand.
“It's a close call whether interest rates are high enough.”
“Every month of above-target inflation compounds the strain on the budgets of American families and businesses.”
“Consumers are expressing despair over persistently higher prices.”
“As expected, electronics is the fastest growing end market, with a combination of project start-ups and higher demand tied to hardware associated with AI.”
“What is becoming increasingly clear is that the energy industry has reentered a growth phase, somewhat reminiscent of the 2012 to '15 time period.”
“The impact from the Middle East conflict remained isolated to the Partitioned Zone, representing about 1 per cent of second quarter total production.”
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.