United States
A mixed day on US equity markets saw investors rotate into value and small-cap stocks. The Dow Jones and the Russell 2000 both posted gains, while the Nasdaq retreated. The S&P 500 added a modest 4 points to close at 6,309, with nine of the eleven sectors advancing. The best-performing sectors were healthcare and real estate, while technology lagged.
The Nasdaq Composite fell 0.39% (-82 points) to close at 20,892, reflecting the broader weakness in tech. In contrast, the Russell 2000 rose 0.79%, and the Dow gained 0.40% to finish at 44,502.
Investor sentiment improved after Treasury Secretary Bessent stated there was no reason for Fed Chair Powell to step down. This helped push bond yields lower, with the 10-year Treasury falling 3 basis points to 4.34%, and the 30-year declining to 4.91%. The U.S. dollar also weakened, losing 0.40%, as its six-month downtrend resumed after a brief bounce.
Technology shares came under pressure following a Wall Street Journal report suggesting that the joint AI venture between Japan’s SoftBank and OpenAI is facing setbacks and has been scaled back. This led to weakness in chip stocks, with Nvidia dropping 2.54% and declines also seen in Taiwan Semiconductor Manufacturing (TSMC).
General Motors shares fell 8.12% despite reporting earnings that beat expectations and reaffirming guidance, which had been lowered in May. The company noted that tariffs had cost it approximately USD 1.1 billion in the second quarter. Ford also slipped, down 1%.
In trade developments, the U.S. President announced a new agreement with the Philippines that sets tariffs at 19%. Treasury Secretary Bessent added that he would meet with Chinese officials to discuss extending the current August 12 tariff deadline. Trade negotiations with the EU were said to be at an impasse with some suggestions they may fail. This fuelled speculation that any tariff implementation may again be delayed as the self-imposed deadlines approach.
Looking ahead, results from Tesla and Alphabet (Google) are due today and may provide fresh momentum for markets, which are currently consolidating at record highs.
Europe
Investor concerns over faltering EU–U.S. trade negotiations and the potential for retaliatory measures by the EU weighed on European equities. Sentiment was dampened by the looming threat of a 30% tariff if no agreement is reached, leading the Euro Stoxx 600 to fall 0.41% to 544.35. Sector performance was mixed, with five sectors declining and six posting gains. The rotation out of technology stocks was evident, with the European tech sector dropping 2.12%.
Disappointing corporate earnings—particularly from German companies—added to the selling pressure. The German DAX was the weakest among major regional indices, falling 1.09% and pulling back from recent highs.
In contrast, the UK’s FTSE 100 managed a modest gain of 0.12%, closing at 9,023.81. The index benefited from its exposure to industrial metals and iron ore, which have seen price increases. Copper miner Antofagasta rose 1.8%, while Glencore gained 3.13%.
Bond yields followed global trends lower. Germany’s 10-year benchmark yield fell 2 basis points to 2.59%, while the UK 10-year yield traded at 4.57%. The euro strengthened against a weaker U.S. dollar, rising to 1.175—close to its recent high of 1.1805.
Australia
A marginal gain on the Australian equity market belied more significant moves beneath the surface, as investors continued to rotate out of financials and into commodity-related stocks. By the close, the ASX 200 rose 9 points, or 0.1%, to finish at 8,677.20. Six sectors closed higher, led by materials and healthcare, while financials were the day’s worst-performing sector.
Iron ore prices continued their upward momentum following the announcement of construction commencing on the world’s largest hydropower dam, located on the eastern rim of the Tibetan plateau. This development drove further investor interest in bulk miners, with BHP rallying 2.60% to $41.51 and Rio Tinto advancing 3.37% (up $3.86) to close at $118.32. The rally extended to Chinese markets, where the Construction and Engineering Index surged 4% to a seven-month high on the back of the news.
Precious metals miners also benefited from the overnight jump in gold prices. Evolution Mining rose 2.81%, while Ramelius Resources spiked 8.13% to $2.66.
In contrast, financial stocks continued to decline, with the Big Four banks bearing the brunt of the sell-off for a second consecutive session. Commonwealth Bank dropped another 3.06% to $172.42, while NAB fell 2.69%. Although no specific catalyst has been identified, elevated valuation levels combined with more attractive opportunities in the mining sector are likely prompting investors to reallocate capital. Additionally, with CBA due to report earnings in early August, some investors may be trimming their exposure ahead of the event.
Insignia Financial (formerly IOOF) soared 12.21% to $4.41 after receiving a takeover offer from private equity firm CC Capital at $4.80 per share. The Insignia board unanimously recommended that shareholders accept the bid. The news lifted sentiment across the asset management sector, with HUB24 gaining 1.30% on potential valuation tailwinds.
Healthcare was supported by continued strength in CSL, which climbed 3.38% to $263.95, marking a 10% gain over the past six sessions. CSL shares have fallen significantly over the past six months amid concerns about U.S. pharmaceutical tariffs and regulatory confusion around vaccine policies. However, several analysts have recently flagged the stock as undervalued, attracting renewed buying interest.
The minutes from the Reserve Bank of Australia’s latest meeting indicated that the board chose not to lower rates due to its commitment to a “cautious and gradual” easing strategy. Most economists now expect a rate cut in the August meeting. Bond yields showed little reaction, with the 2-year rising 1 basis point to 3.33% and the 10-year yield slipping 2 basis points to 4.30%.
In overnight trading, Australian equity futures rose by 39 points, or 0.45%, supported by continued demand for mining stocks in both European and U.S. markets. BHP shares traded in the U.S. closed 1.2% higher than their Australian close, finishing at AUD 42.00 in New York. The Australian dollar also strengthened, beginning the day at 0.6555.
Commodities
Gold continued its upward momentum, rising by US$34.43 to close at US$3,431 — a five-week high — as a weaker U.S. dollar and ongoing uncertainty surrounding trade agreements drove safe-haven buying. Traders noted growing concerns that trade deals between the EU and U.S., as well as India and the U.S., may fail to materialise.
Silver also gained, surpassing US$39 for the first time ever, rising 0.93% to close at a record US$39.29.
Bitcoin advanced towards its recent highs adding 2.3% to close at US$119,770.
Oil prices declined amid trade-related concerns. West Texas Intermediate fell 1.47% to US$66.21, while Brent dropped 49 cents (0.71%) to close at US$68.74.
Copper continued to strengthen, gaining 0.60% to US$9,920 per tonne on the London Metal Exchange. Iron ore stabilised in overnight trade but had earlier advanced by 1.8% during the Asian session. The August Singapore futures contract closed in New York at US$105.35 — a six-month high — as investor sentiment improved on the back of China’s mega dam construction and hopes of broader reforms in the country’s steel industry, which could boost demand.
Economic Calendar
AU:
- Westpac Leading Indes (Jun) – 11.00am
EU:
- Consumer Confidence (Jul) – 12:00am
US:
- Existing Home Sales (Jun) – 12:00am
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
