US equities logged their worst week in a month as mounting concerns over stretched AI valuations combined with weaker second-tier economic data, suggesting the prolonged US government shutdown is beginning to weigh on activity. While official data releases have been delayed, alternative sources are offering a partial glimpse into economic health. Markets initially whipsawed after ISM services PMI surprised to the upside at 52.4 versus expectations of 50.7, even as manufacturing PMI remained in contraction at 48.7.1 Sentiment turned sharply lower later in the week after the University of Michigan survey showed consumer confidence plunging from 53.6 to 50.3.2
In Australia, sentiment was similarly subdued as the global risk-off tone spurred a rotation toward defensive sectors. The Reserve Bank of Australia held rates steady as expected, offering few catalysts for local equities.3 Looking ahead, Thursday’s labour market data will be closely watched as investors gauge the likelihood of further rate cuts in coming months.
Short equity funds (BBOZ, BBUS, SNAS) which benefit from broad market declines, were the top performing funds of the week as global market sentiments turned decidedly risk off.
In the world of commodities:
- Lithium miners (ACDC) outperformed after Chinese provincial governments continued their “anti-involution” campaign against domestic producers with battery giant CATL asked to pay a levy of US$35 million to re-open its Jianxiawo mine, despite obtaining permits a week prior.4
- Hydrogen equities (HGEN) received a sentiment boost after industry bellwether Bloom Energy reported strong demand for its convertible notes offering. The firm upsized the deal from US$1.75 billion to US$2.2 billion amid overwhelming investor interest.5
- With the US Senate making progress toward a deal, gold (GOLD) edged higher as traders positioned for renewed data volatility and potential macro surprises should the government reopen this week.6
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