United States
U.S. share markets rebounded on Tuesday, recovering from the previous day’s losses as investor focus shifted towards upcoming third-quarter earnings reports. The decline in oil and commodity prices also eased concerns, contributing to a more positive sentiment. The Dow Jones Industrial Average gained 126.13 points, or 0.30%, to close at 42,080.37. The S&P 500 rose by 55.19 points, or 0.97%, to finish at 5,751. The Nasdaq 100 outperformed, jumping 1.55%, or 307 points, to close at 20,107.78. Nine of the eleven S&P sectors ended higher, with only energy and materials posting losses. Technology and consumer discretionary were the top performers.
The “Magnificent Seven” tech giants all advanced, led by Nvidia, which surged 4.04% to close at $132.88, up $5165. The rally came after Foxconn’s chairman commented that the AI boom still has momentum and demand for Nvidia’s Blackwell chip is stronger than anticipated. Furthermore, unlisted rival Cerebras, which had expressed intentions to go public, may have to delay its IPO due to a national security review. Tesla also rebounded, gaining 1.54% to close at $244.54.
Retail giants Costco and Amazon saw gains as attention shifted towards the U.S. holiday shopping season. Costco rose 1.93% to $890.42, while Amazon increased 1.06% to $182.72. Meanwhile, oil stocks faced pressure, with ExxonMobil down 2.66% and ConocoPhillips falling 3.42%. U.S.-listed Chinese stocks also faced sharp declines.
PepsiCo reported its third-quarter results, rising 1.92%, but tempered its annual sales growth outlook, citing increased consumer frugality and a shift towards cheaper private-label brands over well-known names.
Bond yields were relatively unchanged, with the 2-year Treasury yield falling by 3 basis points to 3.97%, and the 10-year yield dipping by 0.5 basis points to 4.02%, stabilizing the yield curve. The U.S. dollar also weakened slightly, closing at 102.49. Against the euro, it was trading at 1.0978. Investors are now looking ahead to the release of the latest FOMC meeting minutes, which may provide further insights into the trajectory of U.S. interest rate cuts.
Europe
European shares experienced a downturn on Tuesday, driven by disappointment over the lack of new stimulus measures from China. This led to declines in both commodity and luxury goods stocks, reversing earlier gains. The Euro Stoxx 600 index dropped 0.55%, falling 2.84 points to close at 516.64. Out of 11 sectors, 8 ended in the red, with energy, materials, and consumer discretionary sectors performing the worst, while the technology sector showed resilience.
The French CAC 40 fell by 54.7 points, or 0.72%, to finish at 7,521.31, while Germany’s DAX saw a smaller decline of 0.20%, dropping 37.63 points to close at 19,066.47. The UK market, which has a higher exposure to commodity-related stocks, recorded the steepest decline, falling 1.36% to 8,190.61, a drop of 113 points.
Luxury goods producers were particularly impacted, with LVMH down 3.57% and Burberry losing 4.42%. The ongoing trade tensions between China and the EU have intensified, as China imposed temporary anti-dumping measures on EU brandy imports and launched an investigation into EU pork products. Consequently, shares of brandy makers Remy Cointreau fell 6.37%, and Pernod Ricard dropped 4.18%. Beer giant Heineken also declined by 2.2%.
Mining and energy stocks were hit hard, with Glencore falling 4.5% to close at 417.5 British pounds due to lower commodity prices, and Shell dropping 2.3% on the back of weaker oil prices. Financials were also under pressure; Asia-focused banks HSBC and Standard Chartered fell 4.2% and 2.2%, respectively. The UK homebuilding sector saw steep losses after Vistry Group disclosed accounting irregularities and downgraded its profit outlook due to underreported costs in one division. Vistry’s shares plunged 24.3%, dragging down peers across the sector.
On the macroeconomic front, Bundesbank President and ECB board member Joachim Nagel stated that inflation is on track to drop below the 2% target, but emphasized that the ECB must remain vigilant to ensure it stays on course. The market is currently expecting two rate cuts from the ECB by the end of the year, one in October and another in December.
In the bond markets, yields in Germany fell by 1-2 basis points, while in the UK, the 10-year gilt yield decreased by 2.5 basis points to 4.185%, and the 2-year gilt yield dropped by 3 basis points to settle at 4.185%.
Australia
The ASX 200 futures moved slightly higher by 15 points to settle with a 0.18% gain from Tuesday’s close. BHP was lower by 52c to close at A$43.26 in NY trade a drop of 1.1%. The AUDUSD slipped to be trading at 0.6748
Early optimism for additional economic stimulus from China was dashed when no substantial measures were announced. This reversal wiped out the morning gains, causing the ASX200 to fall by 0.35%, or 28.5 points, closing at 8,176.90. Seven out of the eleven sectors ended in the red, with the materials sector dropping 1.74% and the energy sector falling 0.95%. The best-performing sector was healthcare, which advanced by 0.95%.
The much-anticipated news conference from the National Development and Reform Commission did not deliver any significant stimulus announcements. Prior to the afternoon press conference, iron ore prices had jumped to US$115 for the November Singapore futures contract. However, following the release, prices sharply declined, closing at US$106.15, a 4.2% drop from Monday’s close, by the end of the ASX trading session. This decline weighed on iron ore producers, with Fortescue losing 5.31%, down $1.08 to close at $19.27, and BHP falling 2.39%, down $1.07 to close at $43.79. Rio Tinto (RIO) dropped 15 cents to $120.99, and its takeover target, Arcadium Lithium, also declined by 15 cents, a 2.46% drop, closing at $5.94.
Oil prices fell during Asian trading, prompting profit-taking across the energy sector. Woodside retreated 34 cents, down 1.27% to $26.34, while Santos slipped 0.55% to close at $7.25.
The healthcare sector outperformed, with industry heavyweight CSL rising 1.29% to $292.52, gaining $3.73, and Fisher & Paykel climbing 1.94% to $32.00. Meanwhile, banks saw modest gains across the board, but insurance stocks underperformed due to concerns over potential reinsurance losses stemming from Hurricane Milton in the US. QBE fell 40 cents, or 2.43%, to close at $16.07, and Steadfast Group dropped 1.94% to $5.55. Reece fell 50 cents to $26.73 after going ex-dividend by 7.75 cents per share.
With the bond market reopening, Australian yields climbed in line with global movements. The 10-year government bond yield increased by 9 basis points to 4.16%, while the 2-year yield rose by 12 basis points to 3.78%. The Reserve Bank of Australia (RBA) meeting minutes offered little new insight, reiterating that the board remains vigilant in its efforts to combat inflation. Most economists now expect any potential rate cuts to be postponed until February next year.
Commodities
Commodity markets were anticipating further stimulus measures to be announced in China on Tuesday following the conclusion of a week-long holiday. However, during a news conference held by the National Development and Reform Commission, no significant new stimulus measures were revealed, leading to disappointment among investors and sharp declines in various commodity prices.
Oil prices saw a substantial drop, with West Texas Intermediate crude falling by 4.45%, or $3.44, to close at $73.68 per barrel. Similarly, Brent Crude dropped by $3.60 to close at $77.31, representing a decline of 4.45%. Traders remain cautious about potential developments in the Middle East, but the lack of new updates has shifted focus back to the situation in China.
Adding to the bearish sentiment, the U.S. Energy Information Administration (EIA) reported a revised forecast for 2025, projecting lower oil demand than previously expected, primarily due to a decrease in demand from China—the largest buyer in international markets.
Iron ore also experienced a volatile session on Tuesday. In Singapore, prices initially surged to $115 per tonne from a previous close of $110.75 (+3.8%) before plummeting due to the absence of new stimulus measures, closing at $105 in Asian trade—a 5.19% drop of $5.75. The session in New York was more subdued, with iron ore settling at $104.65.
Iron Ore Price – Singapore Futures – 1 month
Copper prices declined as well, dropping 1.8%, or $187, to close at $9,742 per tonne.
Gold prices fell after expectations for a 50-basis point cut in the Federal Funds Rate for November were eliminated, dampening investor sentiment toward the precious metal. Gold slipped 0.99%, or $26.25, to trade at $2,616.15. Silver, more sensitive due to its industrial usage, was hit harder, dropping 3.83%, or $1.21, to $30.47 per ounce.
Bitcoin also experienced a decline, falling by $1,028, or 1.6%, to close at $61,918.
Economic Calendar
AU:
- Building activity (June Qtr.) – 11.30am
NZ:
- RBNZ Interest rate Decision – 2.30pm
US:
- Wholesale Inventories (Aug) – 12.00am
- FOMC minutes – 4:00am
This article was written by James Woods, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
