United States
US shares edged higher on Tuesday, trading within narrow ranges as investors awaited further clarity on tariffs and the “retaliatory tariff” measures expected to be introduced by the US administration next week. Market participants are increasingly focused on this upcoming announcement, though expectations may be misplaced given the ongoing stream of policy headlines emerging from the White House.
At the close, the S&P 500 rose 9 points, or 0.15%, to finish at 5,776.62. Sector performance was mixed, with real estate and utilities falling over 1%, while communication services gained 1.43% and consumer discretionary rose 0.98%. The Dow Jones Industrial Average was essentially flat, adding just 4 points to close at 42,587. The Nasdaq Composite led the major indices, climbing 83 points, or 0.46%, to settle at 18,271.85, supported by continued strength in tech stocks.
Apple shares rose 1.37% to $223.75 following the announcement of its Worldwide Developers Conference scheduled for early June, where updates to its iPhone, iPad, and Mac operating systems are expected. Alphabet (Google) added 1.68% to close at $172.79. Tesla extended its rebound, gaining 3.5% to $288.14, despite reports that February sales in Europe were down 40% year-on-year. Adding pressure, China’s BYD reported record profits and sales, with plans to sell 5.5 million vehicles in 2024, including 800,000 overseas. Elsewhere in the EV space, Mobileye surged 8.65% after announcing a partnership with Volkswagen to develop autonomous driving technology.
In other corporate news, KB Home dropped 5.21% after posting disappointing Q1 results and lowering its full-year guidance. Analysts cited affordability concerns weighing on housing demand. Meanwhile, Freeport-McMoRan climbed 3.36%, benefiting from the rally in copper prices.
On the economic front, consumer confidence fell sharply, with the Conference Board’s index dropping to 92.9 in March from a revised 100.0 in February. The expectations index, which measures outlook over the next six months, sank to 65.2, its lowest level in 12 years. The report had minimal impact on equity markets, as much of the pessimism appears to be priced in. Traders are now looking ahead to upcoming inflation data later this week and GDP growth numbers next week for a clearer read on the US economy.
In the bond market, yields were little changed, with the 10-year Treasury yield dipping 1 basis point to 4.32%. The US dollar softened slightly, with the Bloomberg Dollar Index down 0.12%.
Europe
European markets advanced on Tuesday, buoyed by a more optimistic global investor outlook regarding the new retaliatory tariffs set to be introduced next week. The Euro Stoxx 600 rose 0.67% to 552.59, snapping a three-day losing streak. In the UK, the FTSE 100 also gained, closing 0.30% higher at 8,663.8, despite reports that Chancellor Reeves will announce in the government’s spring statement that UK economic growth is expected to slow to around 1%.
Gains across the Euro-wide index were led by the energy and financials sectors, with banks in particular seeing strong upside. The banking sub-sector rallied 1.67% after brokers raised price targets on the regions banks. BNP Paribas rose 2.71%, while Banco Santander added 1.8%. Insurers also advanced, with the sector up 1%. Swiss insurer Baloise reported a significant profit increase, pushing its shares 4.30% higher, while Zurich Insurance climbed 1.11%.
Energy stocks strengthened after Shell announced plans to boost shareholder returns through buybacks, supported by strong LNG sales. The company also outlined plans to streamline operations by selling or closing some chemical assets. Shell expects significant growth in LNG demand, particularly from Asia and the booming AI sector, which is driving increased energy consumption.
In fixed income markets, bond yields moved higher, with Germany’s 10-year yield rising 3 basis points to 2.79%, and the UK 10-year yield up 4 basis points to 4.75%.
Australia
The equity market gave up early gains after initially rising by 0.70%, ultimately finishing the day with a modest 5-point gain. The index added 0.07% to close at 7,942.50. Eight of the eleven sectors ended the session higher, with the technology sector leading the way, buoyed by strong overnight performances from U.S. tech companies.
Within the technology sector, Wisetech rebounded 3.8% to $85.18, recovering $3.12 after being heavily sold off over the past month. Similarly, Life360 surged 5.3% to $21.44 as bargain hunters returned to the sector.
Meanwhile, iron ore prices declined following reports that some steel mills in China’s Xinjiang province have cut production by up to 10% in response to oversupply. This pressured the major miners, with BHP falling 0.71% to $39.04 and Fortescue dropping 1.29% to $16.09. James Hardie continued its slide, falling 5.03% to $37.99 as investor disappointment lingered over its bid for U.S. firm Azek. Several brokers downgraded the stock on Tuesday, with one labelling the acquisition as “disappointing for investors” due to concerns it may dilute returns and drag on valuations.
The banks were mixed. CBA edged slightly higher to $148.63, while the other three of the big four declined. ANZ dropped sharply by 3.18% to $28.59 on trading volume that was three times its daily average. Macquarie, on the other hand, benefited from the risk-on sentiment in U.S. markets, rising 2.62% to $204.70.
Bond yields inched higher, tracking gains in U.S. rates. The 10-year yield rose 2 basis points to 4.42%, while the 2-year remained steady at 3.72% as traders looked ahead to the release of the Federal Budget and monthly inflation data due today. Economists are expecting monthly inflation data to be unchanged at a yearly rate of 2.5%.
Australian equity futures were higher advancing 0.59% with a 47-point gain as news from the Australian budget, which has been widely reported as cautious, was digested overnight. The AUDUSd was slightly higher beginning the day at 0.6300
Commodities
Copper extended its rally, breaking through the US$10,000 level on the LME, rising by US$156 (+1.6%) to close at US$10,112 per tonne. Copper futures for New York delivery performed even better, gaining 2.3%. The price spread between copper for delivery in the US and London reached an all-time high on Tuesday, driven by lingering concerns over tariffs. Adding to the bullish sentiment were supply-side disruptions, as Glencore temporarily suspended copper shipments from its Chilean smelter due to operational issues.
Iron ore rebounded from earlier losses in the Asian session, rising 25 cents to close at US$102.25 in New York. Earlier weakness was tied to reports out of China that some steel producers had cut production by up to 10% amid a domestic steel glut, which had pressured iron ore prices lower in Singapore trading.
Oil markets were relatively quiet, with minimal price movement. West Texas Intermediate held steady at US$69.11, while Brent inched up 0.15% to US$73.12. Offsetting factors included progress in ceasefire talks between Ukraine and Russia—resulting in an agreement to protect the Black Sea and energy infrastructure—which were weighed against tighter US restrictions on countries purchasing Venezuelan oil, adding a degree of supply uncertainty.
Gold edged higher, gaining 0.32% to US$3,020. Safe-haven demand remains a key driver, supported by growing retail flows into gold ETFs. Silver surged 1.91% to US$33.65. Meanwhile, Bitcoin continued its steady advance, rising 0.4% to US$88,254 in a relatively range-bound session.
Economic Calendar
AU:
- Monthly Consumer Price Index (Feb) – 11:30am
US:
- Durable Goods Orders (Feb) – 11:30pm
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
