United States
Momentum remained to the upside in U.S. equity markets on Tuesday as investors grew more confident in a potential resolution to the U.S.–China trade discussions currently taking place in London. Commerce Secretary Lutnick stated during the day that the negotiations were “going very well” and anticipated a conclusion by Tuesday night, although talks may extend into Wednesday.
All major indexes closed higher in a broad-based rally, with the S&P 500 gaining 32 points, or 0.55%, to close at 6,038. Ten of the eleven sectors advanced, led by energy and consumer discretionary. The Nasdaq Composite added 123 points (+0.63%) to finish at 19,714, while the Dow Jones Industrial Average rose 0.25% to 42,866.
Consumer discretionary stocks outperformed, driven by a continued recovery in Tesla, which surged 5.67% to $326.09. President Trump appeared to de-escalate his feud with Elon Musk, stating that the government had no intention of ending its relationship with Starlink and wished Musk well. Other automakers also rose, with both General Motors and Ford gaining over 2%.
Alphabet (Google) advanced 1.34% to $180.01 following reports from Reuters that OpenAI plans to use Google Cloud for additional computing capacity. Meta Platforms climbed 1.20% to $702.40 after announcing a $14.8 billion deal to acquire a 49% stake in Scale AI, a company specialising in human-labelled data services which involves real people annotating data to help train models to enhance AI accuracy.
Energy stocks were the best-performing sector, buoyed by rising oil prices and positive sentiment surrounding trade talks. Chevron rose 1.84%, and ConocoPhillips jumped 3.57%. Solar energy stocks also rallied after reports emerged that several major tech firms are lobbying the U.S. government to maintain subsidies for the industry. SolarEdge surged 11.81%, while Enphase climbed 4.21%, rebounding from post-election lows.
On the economic front, optimism among small businesses improved, with the National Federation of Independent Business (NFIB) Optimism Index rising for the first time since December 2024. Bond markets remained stable, with the 10-year Treasury yield at 4.47%. The U.S. dollar was also steady, as the Bloomberg U.S. Dollar Index edged up 0.10%.
Attention now turns to today’s Consumer Price Index (CPI) data for May. Markets expect a monthly rise of 0.2% and a year-on-year rate of 2.4%, a modest increase from April.
Europe
European equity markets were broadly unchanged on Tuesday as investors awaited concrete developments from U.S.–China trade talks. The Euro Stoxx 600 held steady at 553, with eight of eleven sectors advancing. Energy and healthcare led the gains, while financials lagged behind.
In the UK, the FTSE 100 rose 0.24% to close at 8,853, inching closer to a record high. Investor expectations grew that the Bank of England might adopt a less cautious stance on interest rate cuts, following data showing rising unemployment and a slowdown in wage growth.
UK homebuilders rallied, led by Bellway, which raised its forecast for home completions this year. The revision was attributed to tax incentives for new home construction and the government’s continued commitment to increasing housing supply.
Healthcare stocks were strong across Europe, with the sector gaining 1.31%. Novo Nordisk surged 6% after the Financial Times reported that an activist investor was building a stake in the company. AstraZeneca rose 0.93%, despite concerns raised by U.S. Health Secretary Robert Kennedy Jr.’s announcement to disband the CDC’s vaccine advisory board—a move that unsettled both shareholders and public health advocates.
Financials were the worst-performing sector. UBS dropped 4.84% as investors reacted negatively to a Swiss proposal to increase the capital requirements for the bank. Other major lenders also declined, with HSBC—Europe’s largest bank by market capitalisation—falling 1.24%, and Banco Santander down 2.02%.
Bond yields declined amid growing speculation of further rate cuts. UK 10-year gilt yields fell 9 basis points to 4.54%, while German 10-year bund yields declined 4 basis points to 2.52%.
Australia
The Australian equity market reached a new closing high on Tuesday, with the ASX 200 gaining 71 points (+0.84%) to finish at 8,587.20. Ten of the eleven sectors advanced, led by Consumer Discretionary and Financials. However, the index has yet to surpass its intraday record high of 8,615.20, set on February 14.
Investor optimism was buoyed by ongoing trade negotiations between the United States and China, along with elevated energy prices. The Energy sector rose 0.91%, supported by strong oil prices. Woodside gained 0.65% to close at $23.09, while uranium stocks extended recent gains—Paladin advanced 3.61% and Boss Energy climbed 2.08%. Market sentiment was further lifted by news that Amazon is investing in data centres located near nuclear power facilities in the US.
Commonwealth Bank of Australia (CBA) hit another record high, rising $2.10 (+1.17%) to close at $182.00. The other major banks also posted gains exceeding 1%. CBA announced the completion of its divestment in the Bank of Hangzhou, prompting analyst speculation about a potential share buyback to return surplus capital. Suncorp rose 2.55% to $21.71 following broker upgrades, while fellow insurer IAG added 1.94%.
The Consumer Discretionary sector was driven by strong performances from Aristocrat Leisure, which surged 3.63%, and JB Hi-Fi, which rose 2.05% to $111.26. The latter continues to benefit from expectations that falling interest rates will support consumer spending.
The Materials sector lagged, posting only a modest 0.19% gain as iron ore and gold prices pulled back. BHP edged up 25 cents to $36.48, while Rio Tinto declined 0.44% to $109.21. Most gold miners ended the session lower.
In the Technology sector, NextDC led the gains, rising 5.16% to $13.86 after announcing new contracts, including one for its new offshore facility. WiseTech Global also performed well, climbing 2.36% to $108.01.
Economic sentiment improved, with consumer and business confidence indicators rising in May. The results suggest a more optimistic post-election outlook, with fears over harsh tariff impacts starting to ease. Bond yields declined, with the 10-year Australian government bond yield falling 2 basis points to 4.24%.
Overnight gains in US indexes has pushed the ASX200 futures higher by 24 points, a gain of 0.28% raising hopes that a new record could be made in today’s trading session. The Australain currency is also stronger and will begin the day at 0.6523 against the US dollar.
Commodities
Oil prices stabilised and edged lower on Tuesday as traders awaited any concrete outcomes from ongoing U.S.–China trade negotiations. West Texas Intermediate (WTI) slipped 0.47% to close at US$64.98, while Brent crude declined 0.58% to US$66.65. At the Global Energy Show in Calgary, OPEC Secretary-General Haitham Al Ghais reaffirmed the organisation’s outlook for strong oil and gas demand over the next two decades, cautioning that underinvestment in the sector could threaten future supply stability.
Base metals were mixed. Copper dipped 0.36% to US$9,756 per tonne, while iron ore rose 0.47% to US$94.85, with both trading in tight ranges due to a lack of fresh catalysts for industrial commodities.
Gold was notably static, dropping just US$3 to US$3,323, marking one of its smallest daily moves in recent memory. The muted action reflects a wait-and-see approach by traders amid geopolitical uncertainty and pending trade developments. Silver fell 0.61% to US$36.53, holding near record highs as investors digest recent volatility in the precious metals space.
Cryptocurrency markets were similarly subdued. Bitcoin eased by 0.10% to US$109,980, as traders adopted a cautious stance alongside broader risk assets.
Economic Calendar
US:
- Core Inflation Rate -CPI (May) – 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.
