One of them hides under the brim of his cap and murmurs softly. The other swaps between guitars, keyboards and trumpet, sings like a laconic kitten and wears a pair of quietly golden shoes that chime with the decor in this atmospheric East End venue – out of time, slightly oxidised. Julia Stone introduces one of the duo's songs, Main Street, by noting how she wrote it in a fit of guilt after she and her brother shoplifted some lightbulbs. "I don't think I ever told Angus this one's about stealing lights," she chuckles. Her younger brother's bemused shrug confirms it.
You get the feeling that, although these Australian siblings (modestly successful, with prospects)have been together in some form since childhood, they are less twin souls in the project that bears their names than twin poles, thrown together by logic and forces greater than even that. Not a great deal actually happens on Main Street; Julia's distress is implied rather than expressed. Guitarist Ben Edgar plays lap steel, which sends more plangent notes hovering over the song's unobtrusive melancholy. Crash and Burn, the new Angus song that comes soon after it, lives up to its billing a little more. A meditative meander of the kind favoured by Neil Young, it erupts into a full-blooded clatter, thanks in part to the precise, yet creative touches of drummer Chris "Daddy" Dave. He has one of those awesome spiral cymbals that adds a shimmery shudder to the song's crescendo.
The Stones are the kind of wide-open-road Australians who gravitate quite naturally towards Americana, and a few years ago they were set to be the next big thing in low-key folk-pop. Their quietly insidious 2010 song Big Jet Plane (an Angus tune) allied some brightly optimistic lyrics ("I'm gonna take you on a ride on a big jet plane!") to a tune beaten into woebegone submission. Despite (or perhaps because of) this trick, it ended up advertising Maybelline cosmetics and on the soundtracks to US TV series One Tree Hill and 90210. Its video, which features a sad girl working in a soulless warehouse – a potent visual, in these times of youth under-employment – has had more than 19m YouTube views. It still sounds sweetly bleak tonight.
The Stones got to that tipping point organically enough – becoming biggish in Oz, moving to London and recording an EP with Fran Healy of Travis, then two albums for the Nettwerk label that built on their strengths. Not averse to headdresses and hats, Angus & Julia are the exact sort of summertime sadness band people go to festivals to stumble across. Their songs are easy on the ear and sync well, advertising Austrian telephone providers and the Twilight films. Even though Julia has something faintly redolent of Mazzy Star's Hope Sandoval and Joanna Newsom in her more cracked girly vocals, the Stones' wide-open road skews more towards the middle than the margins.
Having got this far, however, the siblings split up. It's still unclear why, other than some nebulous compulsion to get away from each other. Each Stone now has a couple of solo records to their name. Just as folk probably throws up more family bands than most other genres (the Waterson-Carthy clan, First Aid Kit), pop is littered with the charred carcasses of sibling relationships (the Kinks, Oasis). It seemed A&J would join their ranks, until a chance hearing of their music at a party by one of the most influential men in the western culture industry readjusted that trajectory.
Angus & Julia's forthcoming third album is produced by Rick Rubin, the bearded Yoda-figure whose versatile hand has guided a significant tranche of the past 30-odd years of popular music, from the Beastie Boys to Adele via Johnny Cash and Slayer. Rubin got in touch. Julia explained that she and her brother were no longer together. Angus lives on a farm; it took him a while to be included in the conversation. Rubin pursued the reunion goal and got more than that. Having worked together since 2006, Angus and Julia have only recently started actually writing together, rather than trading songs, and it adds a new dimension: the almost-frisson of non-lovers forced to cohabit intimate spaces.
Heart Beats Slow, a new duet with pace and scope, closes the set. Their slurred lines trade off eloquently; unsurprisingly, they seem to be saying goodbye to one another. A Heartbreak, which opens the set, is another new co-write, where the siblings' lines fall messily, and winningly, on top of each other. On their forthcoming record, and live, Angus & Julia are significantly better honed than before, while keeping all the dusty somnambulance that charmed their earlier audiences.
It's not all magic. There is the suspicion here that the Stones' works are perhaps a bit more shabby-chic than genuinely ravaged by the elements; it's also regrettable that the highlights of tonight's set are two covers. Julia reworks Olivia Newton-John's You're the One That I Want as a sparse country ballad and the whole band contribute to an excellent ramble through Bloodbuzz Ohio by the National. It's only at the end that you can hear a pin drop, when Santa Monica Dream (Julia leads, Angus sings backup) really sends a shiver through the crowd. "You're making love now to the lady down the road", is the bombshell here. Unsurprisingly, the song is a tale of leave-taking.
• Kitty Empire reviews Morrissey's new album
