Daily Market Reports | 8:36 AM
This story features GREATLAND RESOURCES LIMITED, and other companies. For more info SHARE ANALYSIS: GGP
US markets began August, the seasonally weak and volatile month, with a thud, as weaker than expected July payroll data and revisions spooked investors on prospects around a slowing US economy.
After a sell off on the ASX200 on Friday, the futures are suggesting more selling to start the week, down some -32pts.
World Overnight | |||
SPI Overnight | 8587.00 | – 32.00 | – 0.37% |
S&P ASX 200 | 8662.00 | – 80.80 | – 0.92% |
S&P500 | 6238.01 | – 101.38 | – 1.60% |
Nasdaq Comp | 20650.13 | – 472.32 | – 2.24% |
DJIA | 43588.58 | – 542.40 | – 1.23% |
S&P500 VIX | 20.38 | + 3.66 | 21.89% |
US 10-year yield | 4.22 | – 0.14 | – 3.21% |
USD Index | 98.93 | – 0.91 | – 0.91% |
FTSE100 | 9068.58 | – 64.23 | – 0.70% |
DAX30 | 23425.97 | – 639.50 | – 2.66% |
Good Morning,
What happened on Friday, Tony Sycamore, IG extract
The ASX200 finished -5 points or – 0.06% lower last week at 8,662, retreating from a near-record high on Wednesday after President Trump announced new tariffs on nations that hadn’t been able or willing to secure a trade deal before the August 1 deadline. Australia was among the lucky ones to receive only a 10% tariff; however, imminent sectoral tariffs on aluminium, steel, and pharmaceuticals remain a threat.
The strongest sectors last week were Consumer Discretionary up 2.56%, Financials up 1.45%, Industrials up 1.31%, and Consumer Staples up 0.74%. Conversely, Materials fell -3.92%, Energy down -1.66%, Utilities off -0.97%, and Health Care down -0.88% sectors were the main drags
US stock markets dived on Friday night as investors reacted to a weak July jobs report and a fresh round of tariffs announced by President Trump. For the week, the S&P500 fell -2.36%, its largest weekly decline since late March. The Nasdaq dropped -2.19%, and the Dow Jones Industrial Average shed -1,313 points, or -2.92%.
The July employment report showed the US economy added only 73,000 jobs, below the expected 105,000. The unemployment rate ticked up to 4.2% from 4.1%, as anticipated.
The grim jobs report marked the first clear evidence of sharp slowing in the hard data; likely due to uncertainty and slowing growth caused by President Trump’s tariffs.
The situation was further exacerbated when Trump dismissed the head of the Bureau of Labor Statistics, claiming the data was “rigged”, raising multiple red flags about politicisation and the potential erosion of data integrity. Trump also criticized Fed Chair Jerome Powell, warning him to “start cutting rates” or face consequences.
Market reactions to Friday night’s events were swift and decisive. Equities and the USD tumbled, along with yields, which caused the odds of a -25bp Fed rate cut in September to rise to 95%, just a day after falling to 50% following the hawkish FOMC meeting.
Taking a walk down memory lane, in 2024, the Fed kept rates on hold at its July meeting but delivered a -50bps cut in September after a weaker than expected August jobs report. If upcoming labour market data surprises to the downside, there’s a reasonable chance of history repeating itself in 2025.
Looking ahead, aside from tariff headlines and dealing with the fallout from Friday night’s jobs report –which will ripple through Asian equity markets– 2Q 2025 earnings season continues this week with reports scheduled from Palantir, Pfizer, Caterpillar, Super Micro Computer, Rivian, Snap, McDonald’s, Disney, Airbnb, Uber, Dash, Lyft, and Under Armour.
There will also be interest in the ISM Services PMI, which is expected to rise slightly from 50.8 to around 51, signalling modest sector expansion.
Chris Weston, Pepperstone extract
The release of the US July nonfarm payrolls report on Friday injected some spice back into cross-asset volatility (vol).
Within the US employment report, two considerations that really stood out were that nearly all the job growth has been concentrated to the healthcare sector; subsequently, if we remove the job growth seen in this sector, the past three NFP prints would have come in at -33k, -45k and -300.
Secondly, the massive -285k revision to the prior two payrolls prints have been most intently debated and rightly so, given that outside of the Pandemic era, the revisions represented the largest 2-month revisions on record.
For me, the US payrolls outcome simply reinforces the focus on the significance and efficacy of the data sample, driven notably by the decade-plus structural decline observed in the response rates. Many also question the methodology used to capture the data, which again appears increasingly out of touch with the evolution in technological shifts.
Trump’s move to dismiss the head of the Bureau of Labor Statistics may be seen by many as erratic. It does speak to concerns on the validity of the data, and not just in payrolls, but in many other important touch points to which the Fed set policy too. This makes the job of pricing risk and economics incredibly challenging for markets players also.
Friday’s payrolls report has pulled the markets thought process to the re-emergence of growth risk into the equation, and this comes at a time when the consensus call is for US core PCE to rise to 3.2% by 4Q2025.
The next US NFP report is not released until 5 September, but it goes without saying there will be an incredible focus and positioning around this date. One might even question the possibility that some could start debating a -50bp cut in the September FOMC meeting. Such a scenario that would require a lot to go wrong in the near-term economic data points, and would almost certainly require a far lower than expected core CPI print due on 12 Aug.
Factions within the investment community had loosely viewed risk markets, the S&P500 for example, as an impending crisis in need of a catalyst, but the steady grind higher in the S&P500 and NAS100 on very low realized vol meant having to chase the market higher.
The US Treasury market did put out a strong message on Friday. I’m still not convinced that we yet have that catalyst. However, there could realistically be a shift in portfolios towards more defensive portfolio construction.
The buy-the-dip crowd won’t have changed their tactical view and will be looking at their next entry points to support. However, there are reasons to believe the S&P500 could see a further -3-5% downside from here.
There has been a solid build-up of leverage in the system, and we also know that traders/investment funds have piled into short volatility exposures, resulting in options dealer’s holding a punchy long gamma (options/derivatives) exposure. A further decline in equity indices will see them have to manage that accordingly. CTAs (professional money managers) would then possibly take down their length should US equity index futures fall through their set trigger levels.
While Trump’s tariff rates are now better known, there is a view the massive investment commitments pledged by a number of the major economic nations lack a robust and transparent framework, and over time, could be viewed in a similar light as China’s pledge to buy US$200bn of US goods in the 2022 Phase One Deal, where, essentially, China made no purchases.
US high yield credit could offer a more defined guide on how the tariff regime and unfolding economics are impacting margins and the competitiveness of the lower quality US corporate landscape. If the market takes the view they now have the required visibility to act, high yield credit spreads could guide and become a more impactful driver of equity returns and possibly also for the USD and gold.
We can also consider the poor seasonal effects for risk as we head into the August northern hemisphere summer period. With the likely reduced liquidity seen through the order books, this could materialise at a time when system liquidity may also fall and become an increased headwind for risk, with the formal start to the US Treasury TGA rebuild process set to result in a -US$400bn-plus reserve drain from the system.
Corporate news in Australia
-Greatland Gold ((GGP)) is under scrutiny for announcing a profit warning after listing on the ASX.
-Silver Mines ((SVL)) has launched a $30m equity raising after a 60%-plus rally in the share price.
-Perpetual ((PPT)) is nearing the completion of the sale of its wealth unit with Oaktree in the lead.
-New Murchison Gold ((NMG)) has rejected Meeka Metals’ ((MEK)) takeover bid.
-BlueScope Steel ((BSL)) has put together a large consortium with Japan’s Nippon Steel, Korea’s Postco and India’s JSW Group to bid for the Whyalla steel plant.
-Beach Energy ((BPT)) partly owned by SGH Ltd ((SGH)), is indicating it would be interested in Santos ((STO)) if the opportunity had arisen.
On the calendar today:
-US June durable goods
FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/
Spot Metals,Minerals & Energy Futures | |||
Gold (oz) | 3413.80 | + 71.40 | 2.14% |
Silver (oz) | 37.09 | + 0.31 | 0.83% |
Copper (lb) | 4.46 | + 0.02 | 0.53% |
Aluminium (lb) | 1.17 | + 0.00 | 0.31% |
Nickel (lb) | 6.62 | – 0.09 | – 1.35% |
Zinc (lb) | 1.24 | – 0.02 | – 1.20% |
West Texas Crude | 67.33 | – 2.05 | – 2.95% |
Brent Crude | 69.67 | – 2.08 | – 2.90% |
Iron Ore (t) | 99.57 | + 0.45 | 0.45% |
The Australian share market over the past thirty days…
Index | 01 Aug 2025 | Week To Date | Month To Date (Aug) | Quarter To Date (Jul-Sep) | Year To Date (2025) |
---|---|---|---|---|---|
S&P ASX 200 (ex-div) | 8662.00 | -0.06% | -0.92% | 1.40% | 6.16% |
BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS | |||
CIA | Champion Iron | Downgrade to Neutral from Outperform | Macquarie |
DRO | DroneShield | Upgrade to Buy from Hold | Bell Potter |
Upgrade to Buy from Hold | Shaw and Partners | ||
GQG | GQG Partners | Downgrade to Hold from Buy | Morgans |
MIN | Mineral Resources | Upgrade to Hold from Trim | Morgans |
Downgrade to Underperform from Neutral | Macquarie |
For more detail go to FNArena’s Australian Broker Call Report, which is updated each morning, Mon-Fri.
All overnight and intraday prices, average prices, currency conversions and charts for stock indices, currencies, commodities, bonds, VIX and more available on the FNArena website. Click here. (Subscribers can access prices on the website.)
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CHARTS
For more info SHARE ANALYSIS: BPT - BEACH ENERGY LIMITED
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For more info SHARE ANALYSIS: GGP - GREATLAND RESOURCES LIMITED
For more info SHARE ANALYSIS: MEK - MEEKA METALS LIMITED
For more info SHARE ANALYSIS: NMG - NEW MURCHISON GOLD LIMITED
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For more info SHARE ANALYSIS: STO - SANTOS LIMITED
For more info SHARE ANALYSIS: SVL - SILVER MINES LIMITED