ASX 200 futures were down 39 points (-0.43%) at 8:30 am AEDT this morning. The S&P/ASX 200 nevertheless finished Monday up 36 points (+0.41%) at 9,055, with IT (+0.89%), Energy (+0.84%) and Financials (+0.66%) leading while Health Care (-0.63%), Telcos (-0.09%) and Utilities (flat) lagged.
Gains were supported by Fed-cut hopes and reports of a preliminary US-China trade deal, though caution ahead of Wednesday’s Q3 Australian CPI kept the index trailing regional peers.
RBA Governor Michele Bullock struck a hawkish tone in London, prompting a repricing that now implies ~11 bp (≈43%) odds of a 25 bp cut next week and ~37 bp of easing by May 2026.
Banks advanced (CBA +0.76%, NAB +0.67%, Westpac +0.62%, ANZ +0.57%); tech outperformed (Life360 +4.65%, Megaport +4.25%) and Energy extended its winning streak (Santos +1.41%, Woodside +1.19%), while Nuix fell 16.78% on the CEO’s surprise resignation and Qantas rose 3.43% on a broker upgrade.
Record highs for Wall St
Wall Street closed at record highs as optimism over a potential US-China trade framework and expectations of a Fed 25 bp cut lifted risk sentiment.
The Dow gained 0.7%, S&P 500 rose 1.2% and Nasdaq added 1.9%, with tech in focus ahead of “Magnificent Seven” earnings. Qualcomm jumped 11.1% after unveiling two data-centre AI chips; Nvidia rose 2.8%, and the Philadelphia Semiconductor Index hit a fresh record (+2.7%). Chinese ADRs (Alibaba, Baidu, JD.com, PDD) rose 2.7%–4.8%, while gold miners (Newmont, Coeur, Hecla) fell 4.5%–5.7% as bullion retreated; Keurig Dr Pepper climbed 7.6% after guiding higher and arranging ~US$7b financing for the JDE Peet’s purchase.
MFS’s Erik Weisman said labour-market softness is driving the expected cut, with potential QT-end signals possible amid rising funding pressures.
“A 25bp cut appears to be a foregone conclusion on October 29 given labour market concerns. The September CPI print is based on a limited sample with a high noise-to-signal ratio and is unlikely to sway the FOMC decision one way or another. There seems to be faith in the thesis that tariffs are a ‘one-time price shock’,” Weisman said.
“Upside surprises in services inflation have not been a major part of the discourse either. Instead, the Fed’s focus has been on weak payrolls. Labor market slack, via its influence on wages, plays a critical role in determining services ex-shelter inflation. Given this context, the laser focus on jobs is not misplaced. Thus, at this juncture, the labour side of the mandate is dominating. If inflation remains sticky at a high run rate well into the first half of 2026, the Fed may loosen less than the market is pricing, but that would be a story for a later date.
“Waller, one of the most dovish members of the FOMC, recently mentioned that he is looking for data to reconcile the apparent disconnect between the weak labour market and robust spending. His unravelling of this puzzle will be critical for him in deciding the course of policy beyond October.
“Meanwhile, that conundrum may be especially difficult to disentangle any time soon given that it remains unclear whether the Fed will have enough government-sponsored, high-quality macro data by December 10. Thus, chances are Powell and others will be non-committal about December and will stress data dependency when the data come back online. This does not mean that the December meeting will be uneventful. Recent behaviour of SOFR [Secured Overnight Financing Rate] suggests a rise in funding market pressures and Powell acknowledged the issue in his recent comments. There is deep awareness and desire to avoid a repeat of repo market strains witnessed in 2019. Consequently, the Fed may signal that it will provide concrete guidance on ending QT in December, with the potential for a surprise announcement ending QT even sooner.”
Europe on a streak
European equities notched a third straight record close as easing Sino-US tensions buoyed sentiment.
- The FTSEurofirst 300 rose 0.3% with banks and tech up 1.2% each, while healthcare slipped 0.5%. Italy outperformed (+1.0%) on heavyweight banks.
- London’s FTSE 100 edged up 0.1%. Novartis dipped 0.9% after agreeing to acquire Avidity Biosciences for about US$12 billion in cash.
Currencies
The US dollar softened through the European and US sessions.
- The euro firmed from US$1.1617 to ~US$1.1645.
- The Aussie rose from US$0.6528 to ~US$0.6555.
- The yen strengthened from ¥153.24 to ~¥152.90 per US$.
Commodities
Crude eased as prospective OPEC output increases outweighed trade-deal optimism and renewed US sanctions on Russia: Brent -0.5% to US$65.62/bbl; WTI -0.3% to US$61.31/bbl.
Base metals climbed, with copper +0.9% to a 17-month high and aluminium +0.8%.
Gold fell sharply (futures -2.9% or US$118.10 to US$4,019.70/oz; spot ~US$3,989) on reduced safe-haven demand, while iron ore edged up 0.2% to US$105.57/t.