Markets Overview

  • ASX SPI 200 futures up 0.5% to 9,019.00
  • S&P 500 up 0.6% to 6,753.92
  • Dow Average little changed at 46,619.88
  • Aussie little changed at 0.6587 per US$
  • US 10-year yield little changed at 4.1307%
  • Australia 3-year bond yield fell 1.1 bps to 3.56%
  • Australia 10-year bond yield fell 2.5 bps to 4.36%
  • Gold spot up 1.4% to $4,041.75
  • Brent futures up 1.1% to $66.17/bbl

 

Economic Events

  • 11:00: (AU) Oct. Consumer Inflation Expectation, prior 4.7%

Australia’s central bank swung to an accounting profit last financial year on lower bond yields and a depreciating currency, though it remained in negative equity and didn’t pay a dividend to the government for a fourth straight year.

A renewed wave of dip buying powered a rebound in stocks on speculation equities have more room to run after a brief respite in the six-month rally from the edge of a bear market.

The insatiable appetite for stocks that’s already driven the S&P 500 up over 35% from its April lows sent the benchmark to fresh all-time highs, energizing investors betting the bull market is nowhere near its end.

Momentum-chasing traders kept piling into equities after a series of records fueled by factors such as corporate resilience and the restart of Federal Reserve rate cuts. Renewed enthusiasm around artificial intelligence has trumped recent calls around a bubble forming in the high-profile tech names that have led the rally.

“With price-to-earnings ratios for today’s tech giants still well below those of the tech firms at the peak of the dotcom bubble, we think the bull market remains intact,” said Mark Haefele at UBS Global Wealth Management.

The S&P 500 surpassed 6,750. The Nasdaq 100 climbed 1.2%. Nvidia Corp. led gains in megacaps as chief Jensen Huang told CNBC that demand for Blackwell chips is “really, really” high. Cisco Systems Inc. is escalating competition with Broadcom Inc. in connecting AI data centers. A gauge of small caps added 1%.

The yield on 10-year Treasuries was little changed at 4.13%. A $39 billion US debt sale saw demand falling slightly short of expectations. The dollar hit the highest since August. Gold topped $4,000.

With a slim economic calendar amid the US government shutdown, investors scoured the minutes of the latest Fed meeting. Officials showed a willingness to lower rates further this year, but many expressed caution driven by concerns over inflation.

At Wells Fargo Investment Institute, Luis Alvarado says the Fed is clearly not on a preset path and data-dependency is now more necessary than before, especially as officials attempt to calibrate between conflicting goals.

“We still expect two more quarter-point rate cuts by the end of this year, and two more next year,” he noted.

Jeff Roach at LPL Financial noted that tariffs were the most talked about topic during the latest Fed meeting.

“Futures markets may turn out to be more accurate than the FOMC’s collective projections, especially if inflation consistently declines in 2026. Investors should expect two more cuts this year but a pause at the January 2026 meeting,” he said.

At Evercore, Krishna Guha highlighted that “many” Fed officials noted the strong high-tech investment while “several” flagged the possibility that AI adoption could weaken labor demand. And that would be a sign that AI macro debates are starting to break into the Fed policy discussion.

“There was no alarm about stock prices, and while stocks have accelerated higher since the September meeting, we continue to see no sign that the Fed leadership is prepared to shift focus from balancing labor and inflation risks to managing risks of market excess,” Guha said.

Despite headline risks, markets have been strikingly calm as investors continue to wait for a catalyst amid a dearth of economic data, noted Mark Hackett at Nationwide. The S&P 500 hasn’t seen a move of at least 1% since August.

And an equity advance of the magnitude we’ve experienced in the past six months was seen in just five other instances since 1950, according to data compiled by Bloomberg.

When US stocks hit a record in September in the past, they proceeded to rally in the fourth quarter, gaining 4.8% on average during that time, according to the Stock Trader’s Almanac’s data going back to 1950.

Looking ahead, Sunday will mark the third year of the current bull market, with the S&P 500 almost doubling in the span.

“For much of this period, technical factors have led the rally, with demand from retail, institutional, foreign investors, and corporate management teams,” Hackett noted. “More recently, fundamental factors have added to the enthusiasm.”

Among those, he cited accelerating economic and earnings growth, along with anticipation of fiscal and monetary tailwinds.