Markets Overview

  • ASX SPI 200 futures up 1.0% to 8,702.00
  • Dow Average up 1.3% to 44,173.64
  • Aussie down 0.1% to 0.6467 per US$
  • US 10-year yield fell 2.6bps to 4.1904%
  • Australia 3-year bond yield little changed at 3.46%
  • Australia 10-year bond yield little changed at 4.32%
  • Gold spot up 0.3% to $3,373.70
  • Brent futures down 1.4% to $68.70/bbl

Economic Events

  • 09:00: (AU) July S&P Global Australia PMI Compo, prior 53.6
  • 09:00: (AU) July S&P Global Australia PMI Servi, prior 53.8
  • 11:00: (AU) Australia to Sell A$300 Million 4.25% 2034 Bonds
  • 11:30: (AU) July ANZ-Indeed Job Advertisements , prior 1.8%
  • 11:30: (AU) June Household Spending YoY, est. 4.9%, prior 4.2%
  • 11:30: (AU) June Household Spending MoM, est. 0.8%, prior 0.9%

A renewed wave of dip buying lifted stocks, with traders sifting through solid earnings amid bets the Federal Reserve will soon cut rates. Bonds saw small moves ahead of a heavy slate of US debt sales.

The rebound in risk appetite drove the S&P 500 up 1.5%, its biggest rally since May. Almost every major group in the US equity benchmark advanced, and about 85% of its companies closed higher. Tech megacaps, which bore the brunt of the recent selling, led gains on Monday. Nvidia Corp. and Meta Platforms Inc. climbed at least 3.5%. The Russell 2000 index of small firms added 2.1%.

Investors should buy into the selloff in US stocks because of the robust earnings outlook for the coming year, said Morgan Stanley’s Michael Wilson. At Goldman Sachs Group Inc., David Kostin noted executives had so far sounded confident in their ability to mitigate the impact of tariffs on profits.

S&P 500 earnings are crushing second-quarter expectations — up 9.1%, triple the pre-season forecast and the strongest beat rate since 2021, according to data compiled by Bloomberg Intelligence.

“This week is a quiet one on the economic calendar, so traders may be taking their cues from earnings, along with any new tariff and trade developments,” said Chris Larkin at E*Trade from Morgan Stanley.

Larkin also noted that a key question now is whether traders will view any signs of economic weakness as a market negative, or as a catalyst for the Fed to cut rates sooner rather than later.

Action in the bond market was fairly muted as the US is set to auction $125 billion of new three-, 10- and 30-year debt this week. The dollar was little changed. Oil fell as traders took stock of OPEC+’s latest bumper supply increase while Donald Trump vowed to penalize India for buying Russian crude.

On the tariff front, President Donald Trump said he would be “substantially raising” the tariff on Indian exports to the US over the Asian nation’s purchases of Russian oil, a move New Delhi slammed as unjustified in an escalating fight between the two major economies.

Meantime, the European Union is expecting Trump to announce executive actions this week to formalize the bloc’s lower tariffs for cars and grant exemptions from levies for some industrial goods such as aviation parts, according to people familiar with the matter.

“Our base case remains that US tariffs will eventually settle around 15%. While this would be the highest since the 1930s, and six times higher than when Trump returned to office, we do not expect it to cause a recession or end the equity bull market,” said Ulrike Hoffmann-Burchardi at UBS Global Wealth Management.

“However, in the near term, the ‘handshake’ nature of trade deals agreed so far means that tensions could resurface as the details are negotiated,” she noted.