Markets Overview

  • ASX SPI 200 futures up 0.4% to 7,600.00
  • Dow Average up 1.0% to 39,016.43
  • Aussie little changed at 0.6554 per US$
  • U.S. 10-year yield little changed at 4.3246%
  • Australia 3-year bond yield rose 0.8 bps to 3.74%
  • Australia 10-year bond yield fell 1.5 bps to 4.16%
  • Gold spot down 0.1% to $2,023.13
  • Brent futures up 0.7% to $83.58/bbl

Economic Events

The stock rally powered ahead as Nvidia Corp.’s bullish outlook rekindled the artificial-intelligence mania and data showed the world’s largest economy is still going strong.

From the US to Europe and Japan, equities hit all-time highs, with the most-valuable chipmaker up 16% Thursday and adding $277 billion to its market capitalization. That’s the biggest single-session increase in value ever — eclipsing a $197 billion gain made by Meta Platforms Inc. With the numbers now in, bulls are calculating Nvidia’s new price-to-earnings ratio, or how much investors are paying for future growth. Put another way, the company’s profits have been growing faster than its shares.

“Nvidia got to where it is because of extremely strong earnings and revenue,” said James Demmert, chief investment officer at Main Street Research. “When a company posts 265% year-over-year revenue growth — like Nvidia did — it deserves a premium valuation.”

The MSCI ACWI Index of both developed and emerging-market shares rose to its highest level ever. The Nasdaq 100 added 3%, while the S&P 500 saw its biggest gain since January 2023. The $16 billion VanEck Semiconductor ETF (SMH) jumped 6.8%.

Equities were also buoyed by solid manufacturing, housing and labor-market data, with traders taking more hawkish Fedspeak in stride. Treasury 10-year yields were little changed at 4.32%.

Other News

Australia and the United Arab Emirates expect to conclude a free-trade agreement by year’s end, Trade Minister Don Farrell said, while suggesting talks with the European Union and India will remain on hold until after elections.

Farrell is headed to the UAE for discussions on an accord this weekend, in conjunction with the annual World Trade Organization Ministerial Conference. The UAE deal is likely to be easier than the fraught negotiations with the EU, Farrell said in an interview ahead of his departure.

“The difficulty in the agriculture sector that presented itself with the EU, that won’t be an issue here,” he said. “There is optimism on both sides.”

The UAE is Australia’s largest trading partner in the Middle East, with two-way goods and services worth A$9.3 billion in 2022. Australia is also looking to smooth the path for investment by the UAE’s sovereign wealth fund, particularly in the nation’s renewable energy sector.

Farrell said he is hopeful that any free-trade deal with the UAE will lead to greater access for Australia across the Middle East. Canberra is also currently negotiating FTAs with the EU and India, but with both deals facing difficulties over agricultural imports, they’re on hold until elections are out of the way.

During his visit to the UAE, Farrell will work with international counterparts to overhaul the WTO, including its dispute settlement system. The mechanism has been out of action since a decision by former President Donald Trump’s administration to block appointments to the WTO’s appellate court.

Farrell said WTO reform has always proved “difficult,” but added that Australia had benefited greatly from the dispute settlement system during its recent problems with China. The minister said the potential for a second Trump administration wouldn’t change his approach to the reforms.

“It’s not dependent on who might or might not be the president of the United States at any one time,” he said. “We want this reform because its good for our national interests.”

Australia took China to the WTO over the tariffs that Beijing imposed on wine and barley following a diplomatic dispute in 2020. However, warming ties since the election of the center-left Labor government in May 2022 have resulted in the barley tariffs being lifted.

Canberra is now waiting for the results of a review by the Chinese government into barriers to wine sales.