United States
It was a quiet day of trading on Wall Street, with markets fluctuating between gains and losses before ultimately ending little changed. The S&P 500 closed flat at 5,970, held back by weaker-than-expected economic data, including the ADP employment report and ISM services index.
Among the major indexes, the Dow Jones Industrial Average slipped 92 points, or 0.22%, to finish at 42,427. Meanwhile, the Nasdaq Composite rose 0.32% to close at 19,460.49. As expected on a day when the S&P 500 remained unchanged, sector performance was mixed—five sectors declined, led by energy, while six posted gains, with communication services leading the way.
The ADP employment report revealed that private employers added the fewest jobs in two years. Given the volatility of this data, investors are now looking ahead to Friday’s non-farm payrolls report for a clearer picture of labour market conditions. Separately, the ISM Services PMI fell to 49.9, marking its lowest level since June 2024. Both data points were seen as reflecting the negative impact of ongoing tariff uncertainty, which is making it difficult for businesses to plan and operate effectively.
Energy stocks retreated after recent gains, as profit-taking set in and oil prices declined. ExxonMobil dropped 1.45%, while ConocoPhillips fell 2.23%. Constellation Energy slid 4.31% despite announcing a long-term nuclear energy supply deal with Meta. In contrast, Meta gained 3.16% to close at US$687.95.
In the automotive sector, a sharp drop in April’s light vehicle sales pressured carmakers. The decline followed a strong March, when consumers brought forward purchases in anticipation of tariffs. General Motors fell 2.83%, while Tesla dropped 3.55% to US$332.05, further weighed down by disappointing sales figures in Europe.
Bond yields fell as investors interpreted the economic data as signalling a slowdown. The yield on the US 10-year Treasury dropped 10 basis points to 4.35%, while the 2-year yield fell 8 basis points to 3.87%. President Trump once again took to social media to urge Federal Reserve Chair Jerome Powell to cut interest rates sooner rather than later, Trump also added in another missive that dealing with President Xi of China has been “extremely hard” . The US dollar also weakened in response.
Europe
European stocks saw gains on Wednesday, with the German DAX reaching a new record high following the German government’s approval of a corporate tax relief program aimed at stimulating economic growth. The DAX rose by 0.77%, closing at 24,276, while the pan-European Euro Stoxx 600 added 0.47%, settling at 551.02. Eight sectors within the Euro Stoxx posted gains, led by materials stocks. In the UK, the FTSE 100 made a modest gain of 0.16%.
In individual stock news, Airbus rose by 2.25% after Bloomberg reported that Chinese airlines were considering placing large orders for aircraft from the company. Remy Cointreau jumped 4% after withdrawing its earnings guidance due to the impact of tariffs. However, the CEO stated that the company had “finally reached the bottom.” Other beverage sector stocks also benefited, with Campari rising by 6.37% ahead of the European summer.
European bond yields saw minimal movement, as traders awaited an anticipated rate cut from the European Central Bank (ECB) on Thursday. Market participants are keen to hear further commentary from the bank regarding the potential pace of future rate cuts. The German 10-year bond yield remained steady at 2.52%, while the EUR/USD pushed back above the 1.14 mark, finishing the day at 1.1419.
Australia
Optimism from the US markets spilled over into the Australian equity markets on Wednesday, with the ASX200 rallying for the second consecutive day, gaining 75 points, or 0.89%, to close at 8,541.80. The rally was broad-based, with 9 of the 11 sectors showing gains, while the remaining two experienced only minor losses. The best-performing sectors were energy (+2.26%), financials (+1.27%), and consumer discretionary (+1.39%).
Energy stocks rose as the price of oil gained overnight, with Woodside adding 2.89% to $22.80. Uranium stocks surged after increased investment in nuclear reactors in the US, following Meta’s agreement for long-term electricity supply from US nuclear firm Constellation Energy. Paladin rose 9.81% to $6.49, and Boss Energy jumped 7.39% to $4.07. Deep Yellow lagged slightly, up 5.91%.
Miners rebounded as the price of iron ore stabilized, with BHP adding over 1%. However, Rio Tinto (RIO) fell 0.31% to $109.60 due to political turmoil in Mongolia, where the company has a significant copper mine. This turmoil raised concerns about the company’s operations and potential expansion. In early May, Mongolia filed a lawsuit against RIO, alleging bribery dating back to 2008. Gold stocks pulled back as the price of gold slipped due to profit-taking.
The financial sector was strong, with most banks, insurers, and fund managers showing gains. CBA continued its record run, rising 1.38% to $181.10. Market chatter has reignited regarding the high valuations of the stock, likely driven by those underinvested in the name. The other major banks all advanced by 1% or more. Netwealth rose 1.71% to $32.76, following the announcement of changes to its board, including the elevation of Michael Watchell to Chairman.
First-quarter GDP data was released, showing annual growth of 1.3%, lower than economists had expected. The lower than expected number was partly attributed to bad weather impacting businesses and tourism, increasing commentary that the Reserve Bank of Australia may need to act more quickly to lower interest rates to prevent further economic slowdown. The 10-year bond yield fell by 1 basis point to 4.24%.
There was little movement in ASX200 futures trade overnight with the contract losing 1 point. The AUDUSD has crept higher to open the day at 0.6490 at the upper end of its trading range over the month of May.
Commodities
Oil prices pulled back as traders took profits following a build-up in U.S. gasoline and diesel inventories, coupled with weakening economic data that raised concerns. West Texas Intermediate (WTI) crude fell by 1.06% to US$62.74, while Brent crude declined by 79 cents to US$64.84, reflecting a similar percentage drop. Supply concerns from Canada’s oil sands were alleviated as some fields, previously shut down due to wildfires, resumed production.
Gold saw a modest bounce, moving 0.56% higher to US$3,372. There was little new information to drive the price of gold, with safe-haven demand and a weakening U.S. dollar supporting the marginal gain.
Copper in London dipped slightly by US$12, settling at US$9,622 per tonne after initially rising on news of lower stockpiles in the UK and fears of production disruptions in some Chilean mines. Meanwhile, iron ore was little changed, closing at US$95.25 in New York, up by 10 cents.
Economic Calendar
AU:
- Balance of Trade (Apr) – 11.30am
- Household Spending (Apr) – 11.30am
China:
- Caixin Services Index (May) – 11:45am
EU:
- ECB Interest Rate Decision – 10:15pm
US:
- Trade Balance (Apr) – 10:30pm
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
