United States
Momentum in US equity markets slowed on Tuesday, with major indices retreating slightly after several days of gains. The Dow dropped 114 points (-0.27%), while the Nasdaq declined 0.38%, closing at 19,142.71. The S&P 500 also fell, shedding 23 points, or 0.39%, to finish at 5,940.46. Trading was quiet, and eight sectors ended lower. Notably, no sector moved more than 1% for the first time in some time. The largest declines were seen in the energy and communication services sectors.
Technology stocks showed muted movement. Apple shares slipped 0.92% to $206.86, while Alphabet (Google) dropped 1.52% to $165.32. Tesla shares edged up 0.51% after CEO Elon Musk reaffirmed his commitment to lead the company for the next five years and announced plans to reduce his political spending.
Travel industry stocks declined on Tuesday. Airbnb fell 3.6% following Spain’s order to remove 65,000 properties from its platform amid rising political pressure over escalating house prices and rents. Viking Cruises dropped 5% despite reporting improved earnings; the company remains unprofitable.
Longer-dated bond yields rose, with the US 10-year Treasury yield increasing by 3 basis points to 4.48%, while the 2-year yield remained steady at 3.97%. Concerns persist regarding the recent credit rating downgrade and the ongoing debate in Washington over the administration’s tax and spending package. Analysts warn that if passed in its current form, the bill could add between $3 trillion and $5 trillion to the existing US debt, which currently stands at $36.2 trillion. The US dollar slipped 0.20% on the Bloomberg Dollar Index, trading at 144.47 against the Japanese yen.
Europe
European shares rose, buoyed by stronger corporate earnings and optimism following the EU-UK deal signed on Monday. Additionally, a consumer confidence indicator released by the EU showed improving sentiment in April.
The Euro Stoxx 600 gained 0.73%, or 4 points, closing at 554.02, with ten sectors advancing. Utilities and communication services were the top-performing sectors. In the UK, the FTSE 100 reached a two-month high, rising 0.94% to close at 8,781.
The broad-based rally was supported by better-than-expected results from several companies. UK engineering group Smiths advanced 4.4% on expectations of continued organic growth. Vodafone surged 7.3%, driven by anticipated gains in its largest market, Germany. Meat producer Cranswick also rose following improved earnings.
Conversely, UBS dropped 3.28% amid reports that the Swiss government plans to require the bank to hold additional capital.
Bond yields edged higher, with the German 10-year rising 2 basis points to 2.60%, while UK yields increased 4 basis points to 4.70%.
Australia
The Reserve Bank of Australia (RBA) cut its benchmark interest rate by 0.25% following its meeting on Tuesday, lowering the rate to 3.85%. In post-meeting remarks, Governor Bullock revealed that a larger cut of 0.50% had been considered. She also noted ongoing concerns about global growth uncertainty and indicated that the RBA might need to adopt a different approach to monetary policy if tariff levels end up higher than currently expected. The dovish tone of the commentary triggered a decline in Australian bond yields, with the 2-year bond falling 17 basis points to 3.42%, and the 10-year bond dropping 13 basis points to 4.39%.
The equity market responded positively to the rate cut, closing higher by the end of the day. The ASX 200 gained 48 points, or 0.60%, finishing at 8,343.30. Eight sectors posted gains, led by technology and the interest rate-sensitive real estate sector.
Within technology, TechnologyOne was the standout performer, surging 11.33% (+$3.74) to $36.76 after reporting first-half earnings that exceeded expectations and announcing an increased dividend of 6.6 cents, up from 5.08 cents previously. The company also upgraded its forward guidance. WiseTech advanced 2.68% to $102.07, supported by an ASX filing revealing that UK investment manager Baillie Gifford had become a substantial shareholder, holding 5.04% of the company’s voting stock.
The real estate sector rose 1.41%, with most companies in the group posting gains. Market leader Goodman Group added 1.83% to $32.20, while Vicinity Centres increased 2.98% to $2.42. Banks were also in demand, with the Big Four and Macquarie all gaining. The interest rate cut, combined with the RBA’s optimistic jobs outlook, is expected to help mortgage providers reduce arrears levels. Commonwealth Bank of Australia (CBA) reached a new record high before settling 0.62%higher at $172.43, and ANZ rose 1.27% to $28.76.
In company-specific news, Telstra announced plans to increase prices on most of its plans by $3 to $5 per month. While this move may disappoint customers, investors reacted positively, lifting the share price 2.19%, or 10 cents, to $4.66.
The Australian equity market is expected to open strongly today as impetus from the lower interest rates continued in overnight futures trading. The ASX200 futures added 52 points, a gain of 0.62%. The Australian dollar was lower over the last 24 hours and is now at 0.6422 against the US dollar.
Commodities
Gold prices firmed on Tuesday, rising US$61 or 1.89% to US$3,290, marking the second consecutive day of a rebound. Last week’s selloff, driven by increased risk appetite, has paused as concerns resurfaced, prompting some traders to cover short positions. Gold imports into China surged 73% from the previous month to 127 tonnes, following the central bank’s easing of import restrictions. Meanwhile, geopolitical tensions reemerged, with any ceasefire in the Ukraine-Russia conflict now appearing increasingly unlikely in the near term.
Bitcoin was again higher adding 1.4% to US$106,953 as traders set their sights on new records for the cryptocurrency above US$110,000
Oil prices were stable, with West Texas Intermediate slipping 0.21% to US$62.56, while Brent crude edged up 3 cents to US$65.57. The European Union and Britain announced new sanctions against Russia.
Industrial metals showed little movement. Copper dipped marginally, falling US$4 on the LME to close at US$9,520 per tonne. Iron ore held steady at US$99.65. The most notable feature of today’s trading was the subdued volatility after months of wild swings, as investors appear cautious, awaiting concrete evidence to support recent economic optimism.
Economic Calendar
AU:
- Westpac Leading Index (Apr) – 10.30am
US:
- 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.
