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News of an apparently locked-in US Senate deal to end the government shutdown, now the longest in history, helped boost sentiment down under on Monday after a fairly bearish two weeks. Heading into the final half hour of trade, the XJO was up +0.60% to 8,824pts.
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US futures rose throughout the Australian session, at 3.30pm AEDT, with the NASDAQ (no stranger to daily volatility) increased 300pts or +1.2%, suggesting that last week’s AI valuation rattles may pause for the time being, though analysts elsewhere don’t expect the shutdown deal to effect ongoing questions about whether or not we’re in a bubble.
This could indicate that the ASX might be in for a better week this week, if the broad mood in the room changes. And it’s worth noting that the US Government shutdown deal comes amidst a flurry of other announcements from Trump.
The US will now support a 50Y mortgage (that increased massively interest paid by homebuyers), that every American resident who isn’t ‘high earning’ will receive a $2,000 stimulus paycheck from tariff revenues (which would ultimately end up costing more than what tariffs have so far generated.) The shutdown deal also comes as major airports have had to cut back flights, right ahead of Christmas.
Food stamp program de-funding remains outside the purview of what the market’s paying attention to, but does pose its own kind of more-than-zero-percent-chance sovereign risk implications should that situation persist.
But that’s enough about America for this afternoon. So what about the ASX? Information Technology led the sectors on Monday up 2% in the final half hour followed by energy and materials. Consumer staples led the laggards followed by real estate; telecomms also flashed red but by less than one tenth.
In big market news today, Droneshield won a wooden spoon for announcing new contracts worth $7M before coming out and retracting that statement, given it already announced those contracts. Talk about a bungle. Elsewhere, the market liked ANZ‘s earnings despite a decline in some key profit metrics and Downer won a $750M contract from Chevron to maintain non-process infrastructure at Gorgon and Wheatstone in WA.
Some rare earths stocks also surged on Monday, too, seemingly out of nowhere, but perhaps on the back of reports that China’s REE deal with the US mightn’t be so trade-conducive as thought; reports have suggested China’s unveiled a new streamlined permit system for Chinese exporters, but this has been received by some as a PR exercise.
In the background, China has also reportedly suspended export restrictions on antimony and other key critmin exports to the US; despite this, Larvotto rose +8% on Monday. That mightn’t be irrational: the market will need to see if those export suspensions actually lead to more exports.
And on the topic of the world waiting to see what this US-China ‘trade deal’ peacetime actually brings in terms of meaningful catalyst, well, the price of gold is hovering above US$4,000 again – suggesting nobody is too sure. Surely, demand for safe haven is still there.
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