United States
Tariff concerns returned to the forefront of investors’ minds on Tuesday, emerging through several developments.
First, data from the Institute for Supply Management (ISM) showed that the Non-Manufacturing PMI slipped to 50.1 in July, down from 50.8 in June. New orders stagnated, and the employment component weakened—both outcomes attributed to rising input costs caused by tariffs.
Second, U.S. President Trump suggested during a interview that a “small tariff” could soon be imposed on pharmaceuticals and hinted that duties on semiconductors may be announced within the coming week.
Third, several companies reporting earnings noted that the higher tariff regime has negatively impacted their results and forward guidance.
These developments dented investor confidence following Monday’s optimism, with major U.S. indices finishing lower. The Dow Jones Industrial Average declined 62 points (-0.14%) to close at 44,111. The Nasdaq Composite dropped 0.65% to 20,916, while the S&P 500 fell 170 points or 0.73%, ending the session at 6,299. Seven of the eleven S&P sectors finished in the red, with utilities and technology among the weakest performers.
In corporate news, Yum! Brands—the parent company of KFC and Taco Bell—fell 5.10% after missing second-quarter earnings estimates, citing slower sales growth due to higher input costs and weaker consumer spending. Fellow fast-food giant McDonald’s is set to report earnings later today.
Caterpillar warned that U.S. tariffs could reduce its bottom line by $1.5 billion in the second half of 2025, citing increased costs across its supply chains. Despite the warning, its shares managed to recover early losses and closed 0.12% higher.
Palantir, the AI software firm focused on defence applications, surged 7.85% after reporting results post-market on Monday and holding onto gains in Tuesday’s session. CEO Alex Karp commented, “We’re planning to grow our revenue… while decreasing our number of people,” calling the trend “a crazy efficient revolution” as businesses begin to realise productivity gains from AI adoption.
Tech stocks, which had rallied earlier in the week, paused as investors trimmed positions. Nvidia dropped 0.97% to US$178.26, while Meta fell 1.66%.
In fixed income, bond yields stabilised. The 10-year Treasury yield edged up one basis point to 4.20%, while the 2-year yield rose four basis points to 3.72%. A three-year bond auction was met with what was described as “mediocre demand,” with further auctions for 10- and 30-year bonds scheduled later this week.
Europe
European and UK equity markets posted modest gains on Tuesday, with the EuroStoxx 600 rising 0.15% to close at 541.4 and the FTSE 100 adding 0.16%, finishing at 9,142 after recovering from earlier losses.
Most sectors on the EuroStoxx 600 finished in positive territory, with nine of eleven ending higher. Energy and materials led the gains, supported by better-than-expected corporate earnings, which helped steady investor sentiment following cautious signals from U.S. data.
UK-based drinks maker Diageo rose 4.9% despite reporting flat profits, as the company flagged expectations of stable U.S. performance in 2026 and outlined plans for an aggressive cost-cutting initiative.
BP climbed 2.8% after reporting results at the upper end of forecasts. The company also committed to reducing costs to enhance shareholder returns and announced a strategic review of how best to monetise its oil and gas assets. BP shares have lagged behind peers in recent months, making the update well received by the market.
In the healthcare sector, Novo Nordisk fell a further 2.27% after UBS downgraded the stock, citing concerns over the company’s growth outlook following last week’s profit warning. The company is expected to release quarterly results later this week.
In fixed income markets, eurozone bond yields remained steady, with Germany’s 10-year bund yield unchanged at 2.62%.
Australia
Buoyed by a strong lead from US equities, Australian investors embraced a risk-on sentiment, propelling the ASX200 to a record high on Tuesday. The index gained 106.7 points, or 1.23%, to close at 8,770.40, with all 11 sectors finishing in positive territory. The strongest performances came from the consumer discretionary and financial sectors, driven by growing optimism around potential interest rate cuts in both Australia and the US. Real estate stocks also rallied, rising 1.41%. The only blemish on the day’s rally was below-average trading volume, which may indicate some caution that the advance can be held.
Iron ore miners posted modest gains of around 0.50% as iron ore prices continued to climb. Gold stocks also advanced in line with a rise in gold prices—Newmont rose 4.12%, while Evolution Mining added 1.38% to close at $7.33. Rare earths miner Lynas surged for a second consecutive session, gaining 5.24% to finish at $11.84, continuing its strong rally since early July and following a large block trade on Monday executed above market levels.
Healthcare stocks gained 0.95%, with CSL closing at $267.20 and ResMed jumping 3.96% to $44.62. Multiple brokerages upgraded their price targets for ResMed following last Thursday’s earnings report, citing margin expansion and strong growth catalysts. However, Telix Pharmaceuticals was a notable laggard, dropping 8.45% to $18.53 after the company revealed that operating expenditure would account for approximately 36% of revenue in the first half. Management attributed the higher costs to expanded operations and a strategy focused on reinvesting earnings into commercial growth.
Financials, which had recently fallen out of favour in preference for growth and undervalued stocks, staged a strong rebound—rising 1.49%. All four major banks and Macquarie (+0.91%) posted gains, with NAB leading the pack, up 1.60% to $38.80. CBA rose 1.38% to $177.34 despite announcing a $130 million provision related to restructuring costs at Bankwest and customer remediation expenses at its New Zealand subsidiary ASB. CBA is set to report its full-year earnings on Wednesday, August 12.
Consumer discretionary stocks rallied on the back of lower interest rate expectations and a rise in household spending. Wesfarmers gained 2.83%, while JB Hi-Fi advanced 1.82% to $115.80. Although household spending data came in below economists’ expectations, it still showed annual growth of 4.8%, up from 4.2% in May.
Finally, Australian bond yields moved lower in line with global trends. The 10-year yield fell 9 basis points to 4.22%, while the 2-year declined 8 basis points to 3.31%.
In overnight trading the ASX200 futures were higher by 13 points (+0.15%) pointing to a modest gain on the open. The Australian dollar has improved slightly trading at 0.6473 against the US dollar.
Commodities
Oil prices continued their decline on Tuesday, settling at five-week lows amid persistent concerns over oversupply. West Texas Intermediate (WTI) fell US$1.13, or 1.70%, to close at US$65.16, while Brent Crude dropped 1.59% to US$67.67. The declines followed OPEC+’s weekend announcement of a significant production increase for September, which fuelled trader concerns around a potential supply glut.
Adding to the pressure, reports emerged that Russia may offer concessions to the U.S.—including an air truce in Ukraine—to avoid the imposition of secondary sanctions on its oil exports, reinforcing the oversupply narrative.
In precious metals, gold edged up 0.21% (+US$7.01) to close at US$3,380, supported by expectations of lower U.S. interest rates and ongoing concerns around the U.S. dollar. Silver also gained 1.09%, finishing at US$37.82.
Bitcoin retreated 1.1%, trading at US$113,825.
Among industrial commodities, iron ore slipped 0.68% (-US$0.70) to US$101.70 in New York, paring back recent gains. Copper fell US$48 to US$9,683 per tonne on the London Metal Exchange. Traders remain focused on supply risks after Chilean miner Codelco announced the closure of its El Teniente complex following an earthquake over the weekend, pending an investigation.
Economic Calendar
No Major Data Releases
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
