United States
U.S. shares slumped on Monday as recession fears gripped investors, triggering a broad market selloff. Rising concerns of the effects of trade tariffs were met with hawkish comments by senior members of the US administration. In response to weekend questions about the possibility of a downturn, President Trump acknowledged that there would be a “period of transition.” Treasury Secretary Bessent told reporters that there would be a “de-tox” period for the economy. Uncertainty remains high, as reflected in the VIX index, which surged to 27.86%, marking an eight-month high.
The S&P 500 fell 2.69%, closing at 5,614, down 155 points. Nine of the eleven sectors ended lower, with technology and consumer discretionary stocks leading the declines. The Dow Jones Industrial Average dropped 2.08% to 41,911, losing 890 points. The Nasdaq Composite suffered the steepest decline, tumbling 4.0% to 17,468.
Selling was broad-based, driven by sentiment rather than specific company news. An index tracking the “Magnificent 7” tech giants slumped 5.4%. Nvidia declined 5.06% to $106.98, while Apple dropped 4.84% to $227.48. Tesla plunged 15.42%, shedding $40.52 to close at $222.15. Meanwhile, Walmart and Costco continued their declines, falling 4.25% and 3.10%, respectively.
Energy stocks found some support in the market rout, with the sector gaining 0.87%, driven by ExxonMobil and Chevron. However, mining stocks declined in line with broader market weakness. Financial stocks were also caught up in the meltdown with most banks lowerin the region of 4% with Morgan Stanley the worst falling 6.37%.
Goldman Sachs downgraded its U.S. growth outlook over the weekend, lowering its forecast from 2.4% in January to 1.7%. The report highlighted concerns over reciprocal tariffs, warning that the U.S. administration views value-added tax (VAT) as a tariff rather than a consumption tax, which could exacerbate trade tensions.
Bond yields fell amid the equity market turmoil, with the U.S. 10-year Treasury yield declining 8 basis points to 4.22%, while the 2-year yield dropped 10 basis points to 3.90%. The U.S. dollar strengthened, with the Bloomberg Dollar Index rising 0.20%.
Note: U.S. market prices are closing prices as their clocks moved to daylight savings.
Europe
European shares were not spared from the global market selloff, as the EuroStoxx 600 declined by 1.29% to 546.2, shedding 7.15 points. Sector performance was mixed, with six sectors closing lower and five finishing higher. The worst-performing sectors were technology and industrials. The FTSE 100 also fell, dropping 0.92% to 8,600.22.
Investor sentiment in Europe remained cautious amid ongoing concerns over rapidly changing policy announcements from the U.S. and the continued risk of a trade war.
The aerospace and defence sector declined by 3.22%, primarily driven by weakness in airline related supplier. Rolls-Royce plummeted 8.56%, while Airbus fell 3.80%. Meanwhile, arms manufacturers remained largely unchanged after Germany’s Green Party proposed blocking the new Chancellor’s plans for a significant increase in government spending.
Technology stocks mirrored early U.S. trading weakness, finishing the European session down 3.47%. In the healthcare sector, Novo Nordisk tumbled 8% after a drug trial for a new diabetes treatment failed to meet expectations.
On the economic front, German industrial output rose in January, and investor confidence surged to its highest level since 2021. The increase in confidence was particularly pronounced in Germany, driven by recent government spending announcements. Goldman Sachs also raised its outlook for the Eurozone economy.
European bonds saw little movement, with Germany’s 10-year yield holding steady at 2.83% and the UKs at 4.64%. Currency markets were similarly stable, with the EUR/USD trading at 1.0827.
Australia
Australian shares edged higher at the start of the week in a subdued trading session. The ASX 200 rose 14.10 points, or 0.18 percent, to close at 7,962.30. Sector performance was mostly positive, with seven sectors gaining and four declining. Energy and materials led the gains, while communication services recorded the largest losses.
Energy stocks rebounded as oil prices stabilised following recent sharp declines. Woodside climbed 1.87 percent to $22.91, while Santos added 1.33 percent to $6.10. In the materials sector, Rio Tinto gained 3.09 percent, or $3.51, to reach $118.71 after announcing over the weekend that it would not proceed with a share issue. Sandfire Resources consolidated its recent gains, as the copper and zinc miner added 1.64% to $11.14.
Insurance stocks also rebounded as concerns over the impact of Hurricane Alfred eased. Suncorp gained 2.35 percent, or 44 cents, to $19.17, while QBE rose 1.25 percent and IAG advanced 1.7 percent to $7.79. The banking sector continued its recent negative trend, with major banks slipping slightly.
Standard & Poor’s announced upcoming changes to the ASX 200 index composition, effective March 24. These adjustments will impact stock prices as passive investment funds and ETFs linked to the index rebalance. John Lyng Group, which is set for removal, dropped 12.5 percent to $2.45. Temple & Webster, one of the new additions, gained 5.31 percent to $16.85, while Nuix climbed 6.01 percent to $3.53 in response to the announcement.
Bond yields moved higher, with the 10-year yield rising 3 basis points to 4.43 percent and the 2-year yield increasing by 4 basis points to 3.80 percent. Today’s release of consumer and business confidence surveys is expected to reflect the impact of the recent RBA rate cut.
The ASX 200 futures are pointing to a sharply lower open falling 70 points the equivalent of a 0.88% fall. The AUDUSD has slipped to 0.6277, down 0.45%.
Commodities
Concerns over slowing global growth weighed on traders as oil resumed its decline. West Texas crude fell by US$1.01 (-1.49%), closing at US$66.05, while Brent crude dropped 1.52% to US$69.30. Further comments from U.S. Commerce Secretary Lutnik, stating that the U.S. would maintain pressure on Mexico and Canada, added to market uncertainty. Oil prices remain near three-year lows.
Copper also weakened, declining US$85 (-0.88%) to close at US$9,528 per tonne. Meanwhile, Chile, a major global copper producer, plans to send a delegation to the U.S. to seek an exemption from proposed American tariffs on copper. Iron ore slipped 0.80%, trading at US$99.40, down from the weekend’s level.
Gold fell as investors took profits, though losses were partially offset by safe-haven buying amid heightened market volatility. The metal declined US$21.60 (-0.75%), trading at US$2,887.28. Silver also dropped 1.46%, settling at US$32.06.
Bitcoin bore the brunt of the risk-off sentiment, plunging 5.3% to US$78,683. The cryptocurrency has now fallen 15% from its Thursday highs after the U.S. administration announced its long-awaited strategic reserve for crypto, which disappointed investors.
Economic Calendar
AU:
- Westpac Consumer Confidence (Feb) – 10:30am
- NAB Business Confidence (Feb) – 11:30am
US:
- NFIB Small Business optimism (Feb) – 9:00pm
- JOLTS Job Openings (Jan) – 1:00am
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
