Wall Street has decided it is 2024 again. The S&P 500 rose 1.49% last night and the tech-heavy Nasdaq added 2.26% to a record close, both their best session since 4 August and a third straight day of gains. The trigger was not an earnings result or a central bank. It was an app. Meta's new AI agent, Muse, went to number one on Apple's App Store over the weekend, displacing ChatGPT with more than 900,000 downloads in six days, and the stock jumped 11.4%. AMD became only the 16th company to be worth US$1 trillion, Intel rose 12%, and the US semiconductor index climbed 4.3% for a fifth straight gain. Falling oil helped too: Brent dropped 3.4% to around US$100, its fourth straight fall, after President Trump said he would "probably" meet Iran's president at the UN this week.
Australia has watched all of this from the sidelines. The ASX 200 finished Friday near flat and Monday up 1 point, a combined two-session move you could lose in a rounding error, and the index has now fallen in five of the last six weeks. The reason is the Reserve Bank. Markets now price a 94% chance of a rate rise to 4.60% at next Tuesday's meeting, all four major banks are calling it, and futures have fully priced a second hike by early next year. A share market with no AI mega-caps and a central bank about to tighten is a hard place to find a rally. Today it is borrowing a little of Wall Street's mood: SPI futures pointed 29 points higher this morning, and in early afternoon trade the ASX 200 is up about 16 points, or 0.2%, near 8,747, with technology doing the lifting and the banks lagging again.
Friday night was a holding pattern. The Dow slipped 95 points, the S&P 500 rose 0.17% and the Nasdaq 0.39%, with roughly US$7 trillion of options expiring in the second-largest "triple witching" on record. Bond yields pushed back up: the US 10-year yield rose 6 basis points to 4.99%, briefly topping 5%, and the 2-year rose 6.8bp to 4.74%, up 12.4bp for the week. The US dollar had its best week in three months, up 1.13%, on the back of the US central bank's hawkish rate rise on Wednesday. For the week, the S&P 500 was slightly lower, the Nasdaq up 0.72% and the Dow down 1.69%.
Monday night was a different market. Communication services rose 3.86% and technology 2.46%, while energy fell 2.57% as oil slid. Beyond Meta (+11.4%) and AMD, Shopify jumped 7.3% on a deal to run checkout inside Muse (Amazon has blocked Muse from its own site, which tells you how seriously it is taking the threat), and Novo Nordisk fell 7.9% despite promising five new blockbuster drugs by 2030. Bonds rallied with oil: the 10-year yield fell back below 5% to 4.95%. We would be careful reading too much into one app chart. The last AI app to top the App Store and move markets this hard was DeepSeek in January 2025, and that one wiped 17% off Nvidia in a single session. The Nasdaq is now just 0.4% below its 13 August peak, which is precisely where a lot of rallies go to test their conviction.
Friday ended where the midday session suggested it would: near flat, leaving the index down 0.11% for the week. Reserve Bank Governor Michele Bullock's inflation warning to a parliamentary committee did the damage. Property trusts were the weakest sector, with Scentre (SCG -1.7%), Stockland (SGP -2.9%) and Goodman (GMG -1.5%) all lower, and the banks gave back more of Thursday's rally: NAB (NAB -1.9%, on a report it will bid for HSBC's Australian deposit book), CBA (CBA -1.0%) and Westpac (WBC -0.2%). Gold miners went the other way, the sector up 3.9%, with Evolution (EVN +4.4%) and Newmont (NEM +2.5%) leading. BHP (BHP +1.4%) and Rio Tinto (RIO +0.8%) also firmed.
Monday closed up 1 point, or 0.01%, after sitting 5 points lower at midday. The banks turned around, ANZ (ANZ +0.9%), NAB (NAB +0.6%) and Westpac (WBC +0.5%), and healthcare led on Cochlear (COH +6.3%) and CSL (CSL +1.5%). Technology was the worst sector again, with Xero (XRO -4.3%) extending a bad run after falling 4.1% on Friday and NextDC (NXT -3.3%) lower. The story underneath the flat numbers is a market rotating into defensives because it has stopped arguing about the Reserve Bank. One hike next Tuesday is fully priced, and a second is priced by early 2027.
Today, still trading at the time of writing, the index is up about 0.2% in early afternoon trade. Technology is the best sector, up 3.1% at midday, as software claws back some of this month's losses: WiseTech (WTC +3.3%) and Xero (XRO +4.0%) are both higher, and the AI-linked names are doing better than the traditional software stocks. Aristocrat (ALL +2.1%) and Qantas (QAN +1.9%) have the consumer stocks up 1.0%. The Big Four are all lower, led by NAB (NAB -0.4%) and CBA (CBA -0.3%), and energy is down 1.2% as Woodside (WDS -1.8%) and Santos (STO -1.4%) catch up with last night's oil fall. Telix (TLX +5.8%) is winning back part of Monday's fall now the ITM merger is complete, and Global Lithium (GL1 +49.6%) has jumped after buying IGO's Nova project for just $7 million, which cuts its funding gap for the Manna project from about $480 million to $175 million. Stock moves are as at midday. Past performance is not a reliable indicator of future performance.
Oil has now fallen four sessions in a row. Brent is down 3.4% to around US$100 a barrel and US crude (WTI) down nearly 5% to US$95.43, from a Brent level near US$104 at the end of last week. Three things drove it: oil and gas flows through the Strait of Hormuz back at a six-month high (a US military claim, and US military claims on this conflict have been optimistic before), reports that President Trump has called off further strikes on the Houthis, and his comment that he will "probably" meet Iran's president at the UN. The sting in the tail is diesel. US retail diesel is still at a record US$6.51 a gallon, which is the part of the energy shock that feeds straight into freight costs and, eventually, the inflation numbers both central banks are watching.
Metals split on the risk-on mood. Gold fell about 1% to roughly US$4,380 an ounce as money moved back into shares. Copper rose 1% to US$14,661 a tonne in London, within 2% of its 10 September record of US$14,875, on tight Chinese supply and hopes for this week's US-China summit. The Australian dollar closed Monday at 71.25 US cents, having recovered most of its fall after the US rate rise, and is trading around 71 US cents today. Brent has also bounced about 1.5% during our session, a reminder that four straight falls do not make a trend. Bitcoin jumped 6.9% to above US$86,000, its highest since late January. We note it and move on.
Takeover season never really stops. Perpetual (PPT -15.1%) fell hardest on Monday after rejecting private equity group EQT's revised $2.6 billion proposal at $22.50 a share, and declaring negotiations over. Today several of its shareholders are calling for a board refresh. That is a board betting its own plan is worth more than a 15% share price haircut on the day, and shareholders will hold it to that. Ingenia Communities (INA +2.4%) also knocked back a higher bid from Warburg Pincus, now $5.05 a share, up from $4.75. Telix Pharmaceuticals (TLX -11.7%) went the other way as a buyer, agreeing to lead a merger with Germany's ITM Isotope Technologies Munich with $1.65 billion upfront, and the market did not like the price. Maas Group (MGH +12.7%) rose on Friday after winning foreign investment approval for its $1.7 billion sale of its construction materials business.
The gold miners told a lesson about guidance. Resolute Mining (RSG -7.0%) cut its production outlook to 205,000 to 225,000 ounces, down from 250,000 to 275,000. Ramelius Resources (RMS +6.1%) guided to the exact same range, at lower costs, and rose. Same number, opposite reactions, because one was a cut and one was a lift. Treasury Wine (TWE +4.1%) rose after agreeing to sell its Seppelt brand and the Great Western winery. Looking ahead, AI infrastructure group Firmus is seeking up to $5 billion in an ASX listing in late October, which would make it one of the largest floats in Australian history. After last night, the timing looks deliberate.
The US-China summit is now the week's main event. US Treasury Secretary Scott Bessent and China's He Lifeng called their weekend talks "successful", Xi Jinping's state visit to Washington is confirmed for 23 to 25 September, and he meets Donald Trump on Thursday night our time. The US has reportedly held back a proposed 7.5% tariff on Chinese goods made with excess industrial capacity until after the meeting. Asian markets took the hint on Monday: China's Shanghai Composite rose 1.63% and Korea's Kospi 1.65%.
The Middle East has shifted from escalation to talk of talks. The Hormuz shipping recovery, a paused Houthi campaign and a possible Trump meeting with Iran's president are the reasons oil is back near US$100. Volodymyr Zelenskyy also expects to meet Trump during UN week, with Trump reportedly pressing Ukraine to stop drone strikes on Russian refineries because of what they are doing to fuel prices. Separately, the IMF warned again that global government debt is on track to pass 100% of GDP by 2029, the background reason long-term bond yields have stayed near 5% even with oil falling.
Today. Australian business activity data (PMI) for September. We will cover the result on Friday.
Thursday 24 September. Australian jobs data for August. Economists forecast a gain of about 20,000 jobs after July's loss of 15,800. A strong number all but locks in next week's rate rise.
Thursday night. The Trump-Xi meeting in Washington, and whatever happens to the delayed 7.5% tariff.
Friday 25 September. US durable goods orders, the only significant US data point of the week.
Tuesday 29 September. The Reserve Bank's decision. A rise to 4.60% is priced at 94%.
This week on the ASX: Cochlear (COH), New Hope (NHC) and St Barbara (SBM) go ex-dividend.