United States
Equity markets in the U.S. extended their gains on Tuesday after inflation data came in below expectations. The Consumer Price Index rose 0.2% in April, bringing the annual rate to 2.3%, slightly lower than the 2.4% forecast by economists.
The S&P 500 added 42 points (+0.72%) to close at 5,886, returning to levels last seen at the end of December 2024 and recovering all losses from the past five months. The Nasdaq Composite outperformed, rising 1.61% (301 points) to finish at 19,010, driven by strength in technology stocks.
The Dow Jones Industrial Average lagged, falling 269.97 points (-0.64%) to 42,140. The decline was largely due to UnitedHealth, which dropped 17.79% after withdrawing its 2025 guidance, citing higher medical costs. The announcement was compounded by the resignation of CEO Andrew Witty.
Nvidia rose 5.63% to $129.93 following news that it will supply AI chips to a Saudi data centre, with reports suggesting U.S. authorities may also approve sales to the UAE. Tesla continued its recovery, gaining 4.93% to close at $334.07.
Coinbase surged 24.75% after it was confirmed the crypto exchange will be added to the S&P 500 on May 19, replacing Discover Financial Services, which is being acquired by Capital One. Boeing rose 2.46% on reports that China will lift a ban on its aircraft deliveries as part of recent easing in U.S.-China trade tensions.
Bond yields were steady despite the CPI release, with the 2-year and 10-year yields unchanged at 4.00% and 4.47%, respectively. The U.S. dollar fell 0.70% on the Bloomberg Dollar Index, while the euro gained 0.95% to trade at 1.1193 against the dollar.
Europe
European equity markets posted modest gains in subdued trading, with the Euro Stoxx 600 rising 0.12% to close at 545.17. The market reflected a consolidation phase, with five sectors closing higher and six lower. Growth-oriented sectors such as technology and consumer discretionary led the gains, while consumer staples and real estate declined, highlighting a rotation away from defensives.
In the UK, the FTSE 100 dipped slightly, losing 2 points (-0.02%) to end at 8,602. Investor caution persisted amid concerns that the recent tariff reprieve between the U.S. and China could be reversed. However, volatility continues to subside as negotiations progress.
European insurers underperformed following disappointing earnings results. Munich Re and Hannover Re both reported sharp declines in Q1 profits, citing elevated claims linked to the Los Angeles wildfires earlier in the year. Their shares fell more than 4%.
In contrast, clean energy stocks advanced after draft U.S. legislation on changes to green energy subsidies and investment incentives proved less restrictive than feared. Vestas Wind Systems surged 9.4%, while Spain’s Acciona Energy rose 5.4%.
Rising prices in industrial commodities supported energy and mining names. Anglo American gained 3.49%, and Shell advanced 1.2%.
European bond yields moved higher. The German 10-year bund yield rose 3 basis points to 2.68%, while the UK 10-year gilt yield climbed to 4.66%. UK labour data indicated a decline in employment and moderating wage growth, suggesting that the economy is softening as businesses adjust to the prevailing uncertainty and workers temper wage expectations.
Australia
Global optimism following the reduction of tariffs between China and the US was somewhat subdued in the Australian equity market on Tuesday. The ASX200 initially opened 0.5% higher but gradually drifted lower throughout the day, finishing at 8,269, a gain of 0.43% (35 points). Six of the 11 sectors closed higher as investors rotated out of defensive stocks and into higher-growth names. Energy, technology, and healthcare led the outperformance, while consumer staples experienced the largest declines.
The rally in US technology stocks lifted the Australian sector by 3.35%. The largest stock in the sector, WiseTech, surged 4.91% to close at $102.48. Life360 rose 13.96% after reporting an increase in profit and raising its guidance, while Megaport gained 3.14%, closing at $12.56.
Better commodity prices led to Woodside gaining 3.7%, finishing at $21.57. Improved iron ore prices saw BHP and Rio Tinto rise by 2.11% and 2.13%, respectively. The fall in gold prices led to declines for gold-related stocks, with Evolution Mining dropping 5.29% to $7.87 and Emerald Resources falling 5.84%. Mineral Resources continued its surge, up 19% over the past two days, closing at $25.04 on Tuesday, following HESTA’s decision to sell its stake due to governance concerns.
Traders rotated out of CBA, which fell 0.62% to $166.14, and NAB, while shifting into the more growth-oriented Macquarie Bank, which added 3.70% to $215.30. Other stocks sold in this rotation included Woolworths, which fell 3.69% to $31.56, and Coles, which dropped 3.37% to $21.52. Investors were also concerned about the potential for a price war in the supermarket sector after Woolworths announced plans to cut prices to regain market share from Coles.
The US executive order on pharmaceuticals, which turned out to be less disruptive than initially expected, led to a bounce in healthcare stocks. The sector was led by Pro Medicus, which jumped 4.36%, and Telix Pharmaceuticals, which increased by 3.64%, closing at $25.36.
Bond yields continued to rise, with the 10-year bond adding 7 basis points to 4.42% and the 2-year bond rising by 9 basis points to 3.52%. In regional bond markets, the Japanese 30-year bond moved higher to 2.95% ahead of an auction, the highest level for this bond since late 2000.
In Asia, the Chinese stock market only advanced by 0.15% following the tariff announcement. Traders suggest this limited movement is due to the expectation that a stimulus package from the government would not materialize. In Australian data, confidence levels in both consumers and businesses showed improvements in April, according to reports from WBC and NAB.
Overnight, ASX200 futures traded higher, adding 16 points, suggesting a 0.20% rise at the open today.
The notable mover was the Australian dollar, which surged 1.45% over the past 24 hours to US$0.6467. The rally was driven by increased expectations for domestic growth and stronger commodity prices, prompting renewed capital flows into Australian assets.
Commodities
Oil prices continued their upward momentum, supported by easing inflation and improved global trade sentiment. West Texas Intermediate (WTI) rose 2.79%, or US$1.71, to settle at US$63.66, while Brent crude climbed 2.45% to US$66.55. The tamer-than-expected U.S. inflation print added to optimism already buoyed by the recent tariff truce. Concerns around OPEC+ supply increases expected in June appear to have faded from traders’ focus. The 11% rally in oil over the past six sessions also points to short covering by traders who had positioned for a more bearish scenario.
Iron ore extended its gains, breaking back above the US$100 mark. The June futures contract delivered in Singapore rose 1.1% over the last 24 hours to US$100.50, reflecting renewed confidence in industrial demand. Copper also advanced, gaining US$79 (+0.83%) to US$9,600, as investors anticipate a rebound in global industrial production.
Gold stabilised following Monday’s decline, rising 0.52% (US$16.72) to US$3,253. The rebound was driven by bargain hunting and expectations that safe haven demand may return. A weaker U.S. dollar also contributed to the support. Silver added 1%, closing at US$32.93.
Economic Calendar
AU:
- Wage Price Index (Q1) – 11:30am
- Home and Investment Lending (Q1) – 11.30am.
US:
- MBA Mortgage Applications (May) – 9:00pm
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
