United States
U.S. markets stabilized on Wednesday as better-than-expected CPI data, showing a 2.8% year-on-year increase, provided relief to traders. However, the data does not yet reflect the impact of recent tariff measures, leading to expectations of higher inflation in the future. Lower oil prices contributed to the softer inflation reading.
The S&P 500 rose 0.49%, gaining 27 points to close at 5,599.30. Sector performance was mixed, with six sectors advancing and five declining. Technology rebounded, while consumer staples weakened. The Dow Jones Industrial Average edged 0.20% lower to 41,350.93, while the Nasdaq Composite outperformed, adding 1.22% (+212 points) to close at 17,648.45.
Analysts cautiously suggested that the recent market selloff might present a buying opportunity. Nvidia shares surged 6.43% to $115.74, while Tesla jumped 7.6% to $248.09. A Morgan Stanley analyst recommended buying Tesla shares on pullbacks. Positive sentiment may also have been influenced by media coverage showing President Trump sitting in a Tesla and suggesting he would buy one, accompanied by CEO Elon Musk.
Among other members of the “Magnificent 7,” Meta gained 2.29%, trading at $619.56, while Apple slid 1.74% to $216.98, pressured by concerns over whispers of a new operating system and recent broker downgrades.
The consumer staples sector saw investors rotate out of defensive positions taken over the past week. Procter & Gamble declined 2.82%, while Colgate-Palmolive dropped 3.66%. Retail stocks were also lower, with Target falling 4.85% and Walmart down 2.56%.
In addition to the CPI release, the U.S. budget deficit for February was reported at $307 billion, as government spending outpaced revenue. Spending showed a slight decline from the previous month. In news after the market closed, Senate Democrats have said that they will refuse to vote for a funding extension that may raise the possibility of a government shutdown. This may add volatility to an already nervous market.
In Canada, the central bank cut interest rates by 25 basis points to 2.75%, warning of a potential “new crisis” due to the introduction of tariffs and their broader economic impact.
Bond yields moved higher, with the 10-year Treasury yield rising 3 basis points to 4.31% and the 2-year yield up 4 basis points to 3.99%. The U.S. dollar strengthened slightly, gaining 0.07% on the Bloomberg Dollar Index as market conditions stabilized.
Europe
Cautious optimism emerged in European markets yesterday following reports that Ukraine had agreed to a U.S.-brokered deal for a 30-day ceasefire, contingent on Russia’s approval. Russia is currently reviewing the details of the proposed arrangement.
The Euro Stoxx 600 gained 0.81%, closing at 541.25, marking its first positive session in five days. Seven of the eleven sectors advanced, with technology, financials, and industrials leading the rally. The UK market also finished higher, rising 0.53% (a 45-point gain) to close at 8,541.
Germany’s DAX outperformed, adding 1.56%, driven by strong gains in Rheinmetall. The defence manufacturer surged 9.6% after reporting a sharp increase in sales and operating profit, with expectations of further growth. The company noted that its current outlook does not yet factor in anticipated government contracts, which could potentially capture up to 25% of NATO’s European budget.
Meanwhile, the automotive sector stabilized, though Porsche shares declined 3% after the company reported a 30% drop in earnings per share, citing weaker demand from China.
Retail stocks struggled, with Inditex (Zara’s parent company) falling 7.5% to €45 after reporting a sluggish start to first-quarter sales. Germany’s Puma also traded lower, issuing a disappointing outlook following weak Q1 sales.
In economic news, the EU announced plans to impose tariffs on U.S. goods next month, while the UK stated it would not retaliate with similar measures. Moody’s upgraded its outlook on European banks from negative to stable, boosting confidence in the sector. The Euro Stoxx 600 banking index rose 1.45% in response.
Bond markets saw mixed movements. German 10-year yields fell 2 basis points to 2.87%, while UK 10-year yields rose 5 basis points to 4.72%.
In currency markets, the EUR/USD edged lower to 1.0891.
Australia
The Australian equity market continued its decline on Wednesday after the U.S. administration decided against granting Australia relief from the newly implemented 25% tariff on steel and aluminium, which took effect today. This, combined with ongoing concerns over global economic growth, saw the ASX 200 drop 1.32% to close at 7,786.20. The index is now down 7.75% from its all-time high, recorded on February 14.
Nearly all sectors of the ASX 200 finished lower, with the sole exception of utilities, which managed a marginal 0.02% gain. The worst-performing sectors were consumer discretionary and industrials.
The selloff was broad-based and accompanied by higher-than-average trading volumes, making it difficult to pinpoint the hardest-hit stocks. The consumer discretionary sector declined as investor concerns grew over weakening consumer demand, fueled by negative global economic headlines impacting confidence. Wesfarmers fell 2.56% to $69.66, while JB Hi-Fi slipped 1.00% to $88.22. Corporate Travel Management dropped 5.01% to $14.21, and Flight Centre declined 3.36% to $13.81, following reports of weakening demand in the U.S. airline industry.
Financials also retreated in line with the broader market, with NAB leading the declines, falling 2.11% to $33.38.
In the materials sector, iron ore miners were under pressure, while gold miners gained. BHP and Rio Tinto both declined 1.77%, closing at $38.95 and $117.23, respectively. Rio Tinto, which fell by $2.11, announced a US$9 billion issuance of investment-grade bonds to finance its recent acquisition of Arcadium Lithium. The bond sale was reportedly heavily oversubscribed after the company ruled out a share placement to fund the acquisition. Bucking the downward trend, Fortescue gained 1.46% to close at $15.93.
Gold miners rallied as gold prices rebounded above US$2,900 amid renewed safe-haven demand. Evolution Mining added 0.81% to $6.21, while Newmont climbed 1.50% to $68.82.
Among the few stocks that rose, Telix Pharmaceuticals advanced 1.73% to $27.07 after announcing the acquisition of a pan-cancer targeting asset from a German university. Data centre provider Digico rebounded 3.21% to $3.86 following Tuesday’s sharp decline. Goodman Group also edged higher, gaining 0.52% to $30.71.
Australian bond yields followed global counterparts higher, with the 10-year yield rising by 6 basis points to 4.43%.
The Australian market is expected to open marginally higher as the ASX200 futures added 0.23% with a gain of 18 points overnight. The AUDUSD begins trading on Thursday higher at 0.632.
Commodities
Oil prices were markedly higher on Wednesday as U.S. inventories unexpectedly declined and oversold market conditions prompted buyers to return. Brent crude rose 2% to $70.95, while West Texas crude gained 2.16%, adding $1.43 to settle at $67.68. Two additional data points contributed to the renewed optimism: better-than-expected CPI data released earlier in the day and an OPEC report that maintained its forecast for relatively strong oil demand growth in 2025.
Gold continued its upward trend, rising $17.68 (+0.60%) to $2,933.22, supported by ongoing themes of tariff concerns and safe haven buying. Silver also gained 0.85%, reaching $33.22.
Bitcoin remained relatively stable, trading at $82,692 with a slight 0.10% decline.
Copper advanced 1.1% to $9,770 per tonne on the LME, with talk of increasing demand driven by concerns over supply shortages amid the global shift toward electrification and weak supply growth. Iron ore remained largely unchanged over the past 14 hours, trading at $100.65, a marginal $0.05 drop from the previous day. The commodity experienced volatility in the Asian session, briefly dipping to $99.30 before recovering to its prior level.
Economic Calendar
AU:
- Melbourne Institute Consumer Inflation Expectations (Mar) – 1100am
US:
- Producer Prices Index (PPI). (Feb) – 11:30pm
- Weekly Jobless Claims – 11:30pm
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
