Muted start to Spring on the cards as Magnificent 7 stumble

Australian futures are pointing to a soft start to September in the antipodes after a muted end to August on Wall Street, where Nvidia and Tesla were among the Magnificent 7 mega-stocks weighing on the US stock market on Friday ahead of the long Labor Day weekend.

Meanwhile, US President Donald Trump’s wide-ranging tariff regime hit another snag after the Court of Appeals for the Federal Circuit rejected the lawfulness of the import levies, priming it for a Supreme Court hearing to make the final decision on whether the cornerstone of the administration’s plans is within the rules.

European stock markets also had a subdued end to the month with British banks including Natwest, Barclays and Lloyds on the backfoot after the Institute for Public Policy Research think tank suggested a windfall tax on banking profits.

Back home, Australian media are reporting local unicorn Crimson Education is getting ready to press the flesh with fund managers across the Tasman, tapping investment bank Barrenjoey Capital Partners to make some introductions.

Summer breeze

Stocks on both sides of the Atlantic had a cool end to the Northern Hemisphere summer, as declines for Nvidia and Tesla were indicative of the broader sell-off for tech stocks, with the Nasdaq Composite down 1.2% and the S&P 500 slipping 0.6%.

Chipmaker Nvidia’s quarterly earnings dropped record revenue and profit figures, but investors were already nervous about the pace of growth for artificial intelligence and were disappointed by some of the company’s segment results.

Meanwhile, European markets were weighed down by declines for banking stocks after a UK think tank called for the government to tax banking profits to clawback some of the gains lenders made from the Bank of England’s quantitative easing programme. The UK’s FTSE 100 index decreased 0.3%, Germany’s DAX 30 fell 0.6%, and France’s CAC 40 dropped 0.8%.

Still, summer was kind to Wall Street, with the S&P 500 up 1.9% in August. In the wintery antipodes, Australia’s S&P/ASX 200 index climbed 2.6% in the month and New Zealand’s S&P/NZX 50 index advanced 0.8%.

Australian futures are pointing to a 0.3% decline for the ASX 200 when it trading opens today, while the kiwi dollar traded at 68.95 US cents at 7am in Auckland from 58.92 cents last week.

“Global equities fell on Friday, but major indices have made strong gains during the month,” Bank of New Zealand senior interest rates strategist Stuart Ritson said in a note. “US consumption and inflation data was broadly in line with consensus estimates and didn’t alter expectations the Federal Reserve will cut rates later in the month.”

Pretty legal

US President Donald Trump’s tariff regime was back to the fore on Friday after an appeals court ruling rejected the legality of the regime. US Trade Representative Jamieson Greer said the ruling – which is now on hold pending a Supreme Court hearing – isn’t deterring negotiations with US trading partners, with other nations still pushing for deals with the world’s biggest economy.

US markets are closed on Monday for the Labor Day holiday, while US jobs data are the main focus for investors this week as they consider whether the Federal Reserve will cut the federal funds rate later this month, with 22 basis points of cuts priced in.

Australian June quarter gross domestic product figures on Wednesday will capture attention in this part of the world, while Reserve Bank of Australia governor Michele Bullock is due to speak the same day.

Local data today include Statistics New Zealand’s July building consents figures.

And the Australian Financial Review’s Street Talk column reported Crimson Education has tapped Barrenjoey to introduce the firm to fund managers across the Tasman as the firm prepares to embark on a non-deal roadshow. Founder Jamie Beaton last year told BusinessDesk the firm was big enough to go public in Australia after hitting the $1 billion valuation when raising US$40 million in November.

 Reporting by Paul McBeth. Image from Aniket Bhattacharya on Unsplash.