ASX 200 Falls as US-China Talks Lift Wall Street; Dow Jones, Nasdaq, S&P 500, Russell 2000 Rally

Highlights

• Wall Street indexes closed higher after strong US job data and renewed US-China trade dialogue

• Australia’s ASX 200 declined as Labor Party secured a parliamentary majority

• Oil prices slipped after OPEC+ confirmed another production increase

Wall Street closed the previous session with broad gains across major indexes, including the Dow Jones Industrial Average, Nasdaq Composite, S&P 500, and Russell 2000. Market sentiment strengthened following the release of upbeat US labor market data and public statements highlighting the intent for renewed trade discussions between the United States and China.

The Russell 2000 led the charge among the indexes, followed closely by the Nasdaq Composite, S&P 500, and Dow Jones. Optimism was further amplified by the absence of new disruptions to leadership at the US Federal Reserve. Public comments clarified that the US President would not seek to remove the current Federal Reserve Chair or pursue an additional presidential term.

A specific announcement regarding a planned tariff on foreign films sparked fresh debates across the media and entertainment sector, with the US President describing the domestic film industry as being in decline.

Asia-Pacific Markets Show Mixed Participation Due to Holidays

Trading volumes across the Asia-Pacific region were subdued as markets in Japan, South Korea, and China remained closed for local holidays. The MSCI Asia Pacific ex Japan index moved upward, with Indian equities recording the most notable movement. The Nifty 50 posted gains amid broader hopes for progress in international trade negotiations.

Australia's S&P/ASX 200 index declined, with market reaction indicating that the federal election outcome had already been priced in. Prime Minister Anthony Albanese's Labor Party secured a majority in parliament, defeating the conservative opposition, whose support declined sharply.

Australia Services Sector Data Marginally Lower Than Expected

Australia’s final services Purchasing Managers’ Index for the latest period came in slightly below both the forecast and previous reading. While still in expansion territory, the lower-than-anticipated figure drew attention to potential shifts in service-sector momentum following the election.

The decline in the ASX 200 followed the data release and broader regional caution due to limited market openings. Key components within the index, including companies such as BHP Group Limited (ASX:BHP), Commonwealth Bank of Australia (ASX:CBA), and CSL Limited (ASX:CSL), reflected the subdued tone in domestic equities.

Crude Prices Slide as OPEC+ Confirms Output Expansion

Crude oil benchmarks, including Brent and West Texas Intermediate, experienced downward pressure as OPEC+ announced a second consecutive increase in monthly production volumes. The planned output expansion, combined with global trade policy developments from the US, contributed to falling energy prices.

Energy producers and related stocks such as Woodside Energy Group Ltd (ASX:WDS) and Santos Limited (ASX:STO) responded to the shift in global oil price direction. Market participants continue to monitor upcoming supply chain developments and broader international trade activity.

US Dollar Eases as Australian and New Zealand Currencies Gain

The US dollar index continued to weaken at the start of the week. Antipodean currencies, including the Australian dollar and New Zealand dollar, advanced. Gains were also recorded in the Japanese yen and the euro against the dollar.

Currency-sensitive sectors and exporters listed on the ASX 200, including Qantas Airways Limited (ASX:QAN) and Treasury Wine Estates Ltd (ASX:TWE), showed price adjustments in line with foreign exchange fluctuations. Movements in the AUDUSD and NZDUSD pairs have drawn market focus ahead of expected developments in US trade agreements.

Metals Up While Cryptocurrencies Decline

Gold and silver recorded fresh gains in early trading, supported by moderated volatility and progress in trade negotiations. Gold prices advanced while silver followed a similar path. Mining sector stocks on the ASX 200, including Newcrest Mining Limited (ASX:NCM) and Evolution Mining Limited (ASX:EVN), were influenced by the rise in metal prices.

Meanwhile, the cryptocurrency market turned lower. Bitcoin and Ethereum declined, reflecting broader sentiment shifts and regulatory developments across digital asset markets. The Australian market showed limited reaction to these digital asset movements.