Weekly recap
What happened in markets
The Australian sharemarket cooled last week, edging 0.3% lower. Drivers of last week’s performance were a reversal in commodity prices, sector rotation and cautious policy rate tone. The Information Technology and Consumer Discretionary sectors both dropped 2.3%, as the AI bubble concerns continued and weak consumer sentiment data for a second month dampened sentiment around consumer spending. Gold prices once again continued to rise, now just above the US$4,000 mark, while oil slipped slightly after a confirmation of a permanent Israel-Hamas ceasefire. In economic related news, RBA Governor Michele Bullock reiterated during the week that services inflation remains sticky, tempering expectations for a near-term rate cut.
US sharemarkets pulled back last week, with broad-based losses, as geopolitical developments shook up all major indices. A large sell-off on Friday attributed most of the losses, after President Trump on social media called out a hostile trade attitude from China and also threatened a large increase in tariffs on Chinese products. The government shutdown, softening labour market statistics and concerns around the sustainability of the current AI run were also key drivers. The Energy and Consumer Staples sectors were the biggest detractors, falling 4.0% and 3.3% respectively. On the other hand, the Utilities (1.4%) and Consumer Staples (0.6%) sectors provided some relief to the market, with energy drink company, Monster Beverage, a stock standout, advancing 3.7%.
European sharemarkets ended the week lower, despite hitting record highs earlier in the week, as renewed trade tensions between US and China unsettled investors. The Automobile & Parts sector was the worst performing, sinking 9.1%, after BMW issued a China driven profit warning and flagging slowing demand, causing a sector wide sell-off. The Information Technology (-4.0%) sector was also a primary detractor, after the US proposed wider chip-equipment export bans to China, causing ASML and ASM International to give up 10.1% and 3.5% respectively. Meanwhile, the European Central Bank's latest policy minutes confirmed that interest rates are likely to remain on hold at 2% while inflation continues to normalise.
Stock & sector movements
What caught our eye
Steel Tariffs Abroad, Policy Pressure at Home
News last week that the European Union plans to double tariffs on steel imports above a reduced quota has added to the pressure facing global steelmakers. The policy action is recognised to be a retaliation and clear countermeasure against the US’ 50% steel tariff announced by US President Donald Trump in June. It reinforces the signal of an emerging recalibration of global trade. While Australia sends only a small share of its steel to Europe, the move reflects a wider trend: growing protectionism and oversupply in global markets.
For local producers like BlueScope Steel, the impact isn’t direct, only ~4% of its revenue comes from Europe, but it still matters. Global prices are shaped by global policy, and when large markets shift, the ripple effects are felt everywhere. BlueScope earns nearly 40% of its revenue from the US and over 30% from Australia, where its main bases are located. Its crown jewel asset, North Star, is one of the best steelmaking facilities in North America, which helps insulate it from US tariffs.
Back home, we’re seeing growing calls for Australian policymakers to step up their support for local manufacturing. The government’s expected bailout of Glencore’s Mount Isa smelter has reignited debate around energy costs, competitiveness, and the future of domestic heavy industry.
BlueScope CEO Mark Vassella has been vocal in urging federal intervention, particularly in fixing gas market policy failures. He’s arguing not just for subsidies, but for a coordinated national smelter strategy. That is, a longer-term plan to ensure energy-intensive industries like steelmaking can remain viable in Australia. Past lifelines such as the $500 million support for the Whyalla steelworks show that public investment in the sector isn’t new.
What this means for investors
For investors, last week’s developments reinforce why the steel sector remains both strategically important and structurally challenged. Global supply gluts, trade walls and energy costs are persistent themes. However, so too are infrastructure demand, re-industrialisation trends, housing shortages and political support for domestic capability.
BlueScope remains a holding in the Cutcher & Neale Australian Shares Model. While the company has limited direct EU exposure, it is still somewhat affected by global pricing. Despite this, we like BlueScope for its exposure to the US re-industrialisation theme, especially given its major US manufacturing presence. Meanwhile, its leverage to Australian residential homebuilding and infrastructure spending is attractive, given these areas have been neglected for years and there’s increasing political pressure to address them as our population burgeons. At the same time, the Investment Committee is not complacent and will continue to monitor developments regarding global steel policy closely.
The week ahead
Locally this week, it is a busy week for the RBA, with three speeches, along with the release of the latest policy meeting minutes. We will also get further insight into how households are holding up, through the spending insights index, while the latest labour force data for September is expected to show 30,000 jobs being added.
Overseas, there is a raft of economic data set for the US. The focus will be on the consumer price index and retail sales, which will provide an insight into the current state of the economy. In addition, the Producer Price Index, House Starts and Import and Export prices will also be released. Elsewhere, China’s consumer price index it expected to contract 0.2% year on year.
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