A global markets summary, for
Australian investors

Australia’s labour market surged by 76.3K this week, significantly exceeding expectations and reinforcing the resilience of the domestic economy, while renewed US-Iran diplomatic talks eased geopolitical risk premiums across global markets.

Five key developments:

1. NZ CPI increases to 1.5% q/q

New Zealand inflation accelerated during the quarter, indicating price pressures remain more persistent than markets had anticipated. The stronger result reduces expectations for near-term monetary easing from the Reserve Bank of New Zealand and reinforces the view that interest rates may remain restrictive for longer as inflation risks continue to linger.

2. Australian labour market grows by 76.3K

Australia’s labour market significantly exceeded expectations, with employment rebounding strongly and reinforcing the resilience of the domestic economy. While the result supports household spending and economic activity, stronger labour market conditions may reduce the urgency for the RBA to ease policy further should inflation remain elevated.

3. ECB keeps Main Refinancing Rate steady at 2.4%

The European Central Bank left its benchmark interest rate unchanged, signalling confidence that inflation is continuing to moderate while economic growth remains subdued. Holding rates steady provides greater policy certainty for financial markets as policymakers continue monitoring incoming inflation and growth data.

4. Iran and US restart talks

Diplomatic negotiations between the United States and Iran resumed during the week, easing concerns that tensions in the Middle East could escalate further. The renewed dialogue improved investor sentiment and reduced geopolitical risk premiums, supporting expectations for greater stability across global energy markets should negotiations continue progressing.

5. US unemployment claims drop to 187K vs 209K previous

US jobless claims fell to their lowest level in several months, highlighting the continued strength of the labour market despite elevated interest rates. A resilient employment backdrop supports consumer spending and economic growth, although it may encourage the Federal Reserve to remain patient before considering further policy easing.

Australian Focus

Futures Market Performance

Precious metals and agricultural commodities led gains this week while equity markets consolidated and the VIX declined, reflecting improved investor sentiment following the resumption of US-Iran diplomatic talks.

Australian agricultural markets remained well supported over the week, underpinned by favourable seasonal conditions across much of the eastern grain belt and resilient export demand. Local grain prices continue to hold at attractive levels ahead of harvest, with Australian Premium White (APW) Wheat trading at A$394/t, Australian Standard White (ASW) Wheat at A$385/t, Feed Barley at A$376/t, Canola at A$843/t, and Grain Sorghum at A$432/t. Livestock markets also remain historically strong, with the Eastern Young Cattle Indicator (EYCI) at 1,015 c/kg cwt, the National Trade Lamb Indicator at 1,239 c/kg cwt, the National Mutton Indicator at 919 c/kg cwt, and the Eastern Market Indicator (EMI) for wool at 1,901 c/kg clean. These prices continue to support farm profitability despite ongoing cost pressures from labour, fuel and inputs.

Global commodity markets were mixed during the week. Precious metals outperformed, with Silver (+5.15%) and Gold (+1.95%) both higher, while agricultural futures also strengthened, led by Corn (+4.38%), Soybean Meal (+4.09%), Canola (+3.83%) and Soybeans (+3.74%). Energy markets continued to recover, with Brent Crude (+2.99%) and WTI Crude (+2.82%) advancing as supply concerns remained in focus. Meanwhile, equity markets were relatively subdued, with the S&P 500 (+0.12%) broadly unchanged and the Nasdaq (-0.59%) consolidating recent gains. Investor sentiment improved noticeably, reflected by the VIX declining -5.90% over the week.

ASX Weekly Heatmap

The ASX was mixed with resources and energy stocks outperforming on firmer commodity prices while healthcare and consumer discretionary continued to face selling pressure amid ongoing sector rotation.

The Australian share market delivered a mixed performance, with strength returning to mining and energy stocks while consumer-facing sectors remained under pressure. Resources outperformed, led by BHP (+1.99%), NEM (+3.11%), S32 (+13.38%), WDS (+7.97%), STO (+5.15%) and EVN (+7.83%), supported by firmer commodity prices and improving sentiment towards the sector. Financials remained resilient, with NAB (+1.51%), WBC (+1.20%) and CBA (+0.60%) posting gains. Conversely, weakness was concentrated across healthcare and consumer discretionary, with CSL (-7.87%), RMD (-4.86%), PME (-17.31%), WES (-5.96%) and WOW (-0.73%) weighing on the index as investors continued rotating away from higher-valued defensive growth companies.

If any of this week’s developments raise questions about your portfolio, please get in touch.