United States
US equity markets paused near record highs overnight as renewed trade tensions overshadowed investor optimism and recent gains. The S&P 500 closed virtually unchanged, while the Dow Jones Industrial Average slipped 0.4%. The Nasdaq 100 eked out a marginal gain of 0.03%, with a mixed performance across megacap stocks—Tesla advanced modestly, while Amazon fell -1.84% as early Prime Day sales underwhelmed, down 14% in the first four hours, according to data from Momentum Commerce.
Trade policy dominated headlines, with President Donald Trump confirming that the August 1 deadline for implementing new tariffs remains firm, despite earlier market hopes for an extension. Trump floated the possibility of imposing a 50% tariff on copper imports and levying up to 200% on foreign pharmaceutical products, although he suggested drugmakers may have a one-year grace period. The uncertainty kept traders on edge, contributing to choppy price action across sectors. Freeport-McMoRan surged on the copper news, while a gauge of drugmakers swung intraday.
In fixed income, US Treasury yields climbed, with the 10-year yield rising three basis points to 4.41% and the 30-year nearing the 5% mark. A US$58 billion auction of three-year notes met with tepid demand, kicking off a week of heavy bond supply. The dollar traded flat overall, while the Japanese yen weakened 0.4% to 146.64 per US dollar, reflecting a shift in sentiment toward risk assets.
Equity strategists remained generally constructive. Goldman Sachs raised its 12-month S&P 500 forecast to 6,900, citing expectations for earlier Fed rate cuts, and Bank of America lifted its year-end target to 6,300. Still, Deutsche Bank warned that idiosyncratic tariff impacts could erode profit margins despite solid top-line growth, particularly as Q2 earnings season kicks off.
Europe
European equities recovered from early losses to close higher, as trade concerns were offset by signs of renewed diplomatic engagement. The Stoxx Europe 600 Index rose 0.4%, supported by gains in autos, basic materials, and energy stocks. Real estate underperformed as higher bond yields weighed on rate-sensitive names.
Investor sentiment improved after the US and Japan agreed to continue trade talks following a call between Japan’s Economic Revitalisation Minister Ryosei Akazawa and US Treasury Secretary Scott Bessent. Meanwhile, the European Union is lobbying for exemptions on key US tariffs targeting products such as aircraft, wine, and spirits. This helped lift shares of Remy Cointreau and Pernod Ricard by 4.2% and 3.2%, respectively.
Despite the day’s recovery, the European equity benchmark remains 3.1% below its March peak. Analysts suggested the worst-case scenario has been averted for now, with markets taking cues from Trump’s willingness to delay the tariff increase until August 1. Entain Plc gained 2.4% after Bank of America upgraded the stock, citing strong iGaming trends and optimism around its BetMGM unit.
Australia
The Australian sharemarket ended virtually flat on Tuesday as investors digested a surprise decision by the Reserve Bank of Australia to keep the cash rate unchanged at 3.85%. The S&P/ASX 200 Index closed up just 1.4 points to 8590.7, having swung between modest gains and losses throughout the day. The RBA’s move caught most traders and economists off guard, as consensus expectations had priced in a quarter-point rate cut.
Bank stocks offered some support, with Commonwealth Bank snapping a losing streak to rise 0.8%, while ANZ and NAB edged higher. In contrast, retail and property sectors dragged on the index. Consumer staples declined 1.4%, led by losses in Woolworths and Coles, down 1.1% and 1.3%, respectively. Real estate stocks, which had rallied ahead of the rate decision, saw profit-taking: Mirvac fell 1.8%, GPT Group slipped 1.2%, and Scentre lost 1.3%.
Investor reaction to the rate hold was muted overall. IG’s Tony Sycamore noted that while interest-rate-sensitive sectors were under pressure, the banks’ resilience helped temper broader selling. The RBA signalled that while more easing is likely, the board preferred to wait for further data to confirm inflation is sustainably within target.
In corporate news, DigitalX shares soared 34.2% after announcing a $20.7 million strategic investment backed by major crypto players. Platinum Asset Management climbed 3% after finalising its merger with L1 Capital. Domino’s Pizza added 2.4% following a UBS upgrade to “buy”, while Guzman y Gomez fell 1.5% as JPMorgan initiated coverage with an “underweight” rating.
The ASX is expected to open modestly lower this morning, with ASX200 futures down -7 points or -0.08% to 8,571.
Commodities
Commodities were mixed amid global trade uncertainty. West Texas Intermediate crude rose 0.6% to US$68.33 a barrel, while Brent settled at US$69.97. US copper futures surged 13.25% to US$5.65 a pound after Trump floated higher tariffs on imports. Iron ore also advanced 0.8% to US$95.95 a tonne, benefiting from resilient demand in China.
Gold fell 1% to US$3,301.92 an ounce as investors weighed the competing forces of rising tariffs and central bank caution. Bitcoin and Ether gained 0.8% and 3% respectively, with Bitcoin trading at US$108,807.
The Australian dollar strengthened 0.6% to US65.29¢ following the RBA’s hawkish hold, while the local 10-year bond yield rose to 4.26%, reflecting shifting interest rate expectations.
Economic Calendar
No major data
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
