United States
Investor confidence took a hit on Friday as a return to tariff threats from the US administration cast doubt over the markets perception that tariff level would be set at reasonable levels when the current 90-day pause ends. US equities declined after President Trump suggested imposing 50% tariffs on the European Union, citing stalled trade negotiations that he claimed were “going nowhere.” He also floated a 25% tariff specifically targeting smartphones, a move that would affect Apple’s iPhones if not manufactured in the US, as well as other smartphone producers like Samsung. Apple shares fell to a two-year low, dropping 3.02% to close at $195.27 on the news.
Among the major indices, the Dow Jones Industrial Average fell 256 points (-0.61%) to close at 41,603. The Nasdaq Composite slid 1% to 18,737, while the S&P 500 lost 39 points (-0.67%) to finish at 5,802. Of the 11 S&P sectors, seven declined, with technology, consumer discretionary, and communication services leading the losses. Utilities were the best-performing sector.
Most large-cap stocks ended the day lower. Nvidia dropped 1.16% to $131.29 ahead of its earnings report on Wednesday, and Amazon slipped 1.04% to $209.99.
On the upside, stocks linked to the nuclear industry rallied after an executive order was signed directing the Nuclear Regulatory Commission to expedite the licensing process for reactors and power plants. This move comes amid expectations of surging electricity demand driven by AI expansion. The Global X Uranium ETF rose 11.61%, Uranium Energy Corp surged 25%, and Cameco (a supplier of uranium and services to companies) climbed 11.13% to $58.69.
US Steel surged 21.24% following a post by Trump on Truth Social announcing a proposed partnership with Nippon Steel, suggesting the long-delayed merger may finally gain regulatory approval. Trump also noted that US Steel’s headquarters would remain in Pittsburgh. Shares gained an additional 3% in after-hours trading to reach $53.65.
In the bond market, yields edged lower, with the 10-year Treasury falling 2 basis points to 4.51%, while the 2-year remained steady at 3.99%. Meanwhile, the US dollar resumed its decline as investor confidence in policy direction faltered. The Bloomberg US Dollar Index dropped 0.78% to a new two-year low. The US dollar was trading at 1.1362 against the euro and 142.56 against the yen, which appreciated more than 1% on the day.
US markets will be closed on Monday in observance of Memorial Day.
Europe
The renewed threat of 50% tariffs on the European Union, set to begin on June 1, weighed on European markets, with the Euro Stoxx 600 falling 0.93% to close at 545.13 on Friday. The index initially dropped over 2% before paring losses. Nine of the eleven sectors closed lower, with technology and consumer discretionary stocks leading the declines. In contrast, the UK’s FTSE 100 was more resilient, slipping just 0.24% to 8,717, less affected due to a recently signed trade agreement with the United States earlier in the month.
The auto sector was among the hardest hit after the US president specifically referenced European cars in his tariff comments. The sector fell 3.1%, with BMW down 3.7% and Stellantis (formerly Fiat Chrysler) sliding 4.6%. Luxury goods were also under pressure, with Hermès losing 2.6% and Richemont down 2.3%.
Gold-related stocks advanced as the price of gold rallied on safe-haven buying. Materials stocks also gained on higher copper prices, with Glencore adding 0.8% and Anglo American jumping 3.4%.
In economic news, UK retail sales exceeded expectations, supported by improved weather conditions. Meanwhile, bond yields declined as investors grew more cautious about the region’s growth outlook. Germany’s 10-year yield fell 7 basis points to 2.56%, while the UK 10-year yield also dropped 7 basis points to 4.68%. Shorter-term yields were similarly lower, reflecting increased market expectations for further rate cuts by the European Central Bank.
Australia
The Australian equity market is set to start the week on the back foot, with ASX 200 index futures down 0.36%, or 30 points, following losses in overseas markets. The Australian dollar strengthened by 1.20% to trade at 0.6488. While US dollar weakness was evident on Friday, the AUD also gained ground against a range of other currencies.
On Friday, the ASX 200 managed a modest gain of 12 points (+0.15%) to close at 8,360.90. Market breadth was evenly split, with six sectors advancing and five declining. The strongest performances came from the energy and technology sectors, while utilities lagged.
The energy sector’s rise was largely driven by uranium stocks, following reports that the US President is expected to sign an executive order supporting the nuclear industry. Paladin Energy surged 6.65% to $5.77, while Boss Energy jumped 12.11%, gaining 43 cents to close at $3.98. Some market participants also attributed the rally to short covering. Woodside Petroleum added a modest 0.56% to finish at $21.58.
In the technology sector, WiseTech Global advanced 1.33% to $100.05. The Australian Financial Review reported on Sunday that WiseTech is preparing to announce the acquisition of US software company e2open for US$2.6 billion, with a debt package arranged to fund the deal. TechnologyOne (TNE) also gained, rising 1.61% to $38.61. TNE has held onto it gains after its results last week and several brokers upgrading their price targets.
In company-specific news, Fortescue Metals dropped 2.39% to $15.51 after announcing further changes to its senior leadership team, with the COO stepping down. Origin Energy declined 1.07% to $11.05 after warning of lower earnings from its stake in Australian Pacific LNG (APL) due to a price review for the long-term supply contract APL has with Sinopec. Origin owns 27.5% of APL.
In fixed income markets, bond yields moved lower. The 10-year yield fell by 3 basis points to 4.42%, while the 2-year yield declined by 2 basis points to 3.39%. Investors now turn their attention to Wednesday’s release of the monthly CPI data.
Commodities
Gold surged 1.91% to US$3,357 per ounce on safe-haven buying, as renewed tariff threats re-emerged as a key concern for markets. The announcement of a potential 50% tariff on the European Union reignited worries about escalating trade tensions and reminded investors of the 90-day tariff pause announced roughly six weeks ago. There are growing concerns that the US may unilaterally impose trade terms, given limited time for effective negotiations. A weaker US dollar also contributed to the upward pressure on gold prices.
Oil prices edged higher, with West Texas Intermediate (WTI) gaining 0.54%, or 33 cents, to settle at US$61.53 per barrel. Brent crude rose by the same percentage. Buying was attributed to traders covering short positions ahead of the long three-day Memorial Day weekend. Ongoing negotiations between the US and Iran also introduced caution, as market participants remained alert to any developments that could trigger volatility.
Copper rose US$110 (+1.1%) to US$9,610 per tonne on the London Metal Exchange, benefiting from the weaker US dollar. In contrast, iron ore declined 1.3% to US$98.00 per tonne, weighed down by demand concerns.
Bitcoin pulled back 3% to US$107,698 following recent record highs above US$111,000 on Thursday, as traders engaged in profit-taking.
Economic Calendar
No major economic data – US financial markets closed for Memorial Day
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
