United States
U.S. shares slipped on Monday, ending a nine-day winning streak, as new tariffs targeting the movie industry dampened investor sentiment. However, markets recovered from early session lows after stronger-than-expected ISM services data showed a robust increase in service sector activity. Optimism was further supported by reports that the U.S. and India were nearing a trade agreement focused on steel and auto components.
The Dow Jones Industrial Average fell 0.24%, closing at 41,218 with a 98-point loss. The Nasdaq Composite declined 0.74% to 17,844, while the S&P 500 dropped 0.64%, shedding 36 points to finish at 5,650. Ten of the eleven S&P sectors ended in the red, with consumer discretionary and energy leading the declines. Consumer staples was the only sector to eke out a gain, up 0.02%.
Energy stocks were hit hard as oil prices fell to multi-year lows following news that OPEC+ would boost production. The sector fell 2.02%, driven by sharp losses in ExxonMobil (-2.77%) and ConocoPhillips (-4.16%). Energy equipment and services companies also declined, with Halliburton down 3.6% and SLB (formerly Schlumberger) off 2.8%. The ongoing slump in oil prices is likely to pressure higher-cost U.S. shale producers, potentially leading to mine closures if low prices persist.
Shares in Berkshire Hathaway dropped 4.87% after the company announced that Warren Buffett would step down as CEO to focus solely on his role as Chairman. The firm also reported weaker-than-expected first-quarter results, further weighing on investor sentiment. Broader financials were mostly lower, with Goldman Sachs slipping 1.16%, while traditional banks remained relatively flat.
Apple gave back recent gains, falling 3.15% to USD 198.89, as hopes for tariff relief faded. Tesla shares declined 2.42% following continued weak sales figures from Europe and Asia. In Spain, Tesla sales were down year-on-year, while rival EV brands saw solid growth, highlighting the company’s regional challenges.
In the bond market, yields edged higher in quiet trading ahead of Wednesday’s FOMC meeting. The 10-year Treasury yield rose 3 basis points to 4.34%, while the 2-year yield climbed 1 basis point to 3.83%.
Europe
The Euro Stoxx 600 started the trading week with a modest gain, rising 0.16% to close at 537.31—marking its tenth consecutive daily advance. Five of the eleven sectors finished higher, led by real estate, while the energy sector was the weakest performer, weighed down by falling oil prices. UK markets were closed for the day, while on the continent, the German DAX outperformed with a gain of 1.12%.
Investor sentiment in Europe showed a notable improvement, with the May reading of the Sentix Investor Confidence Index rising sharply. The survey revealed that European investors have become less concerned about an imminent recession, a shift from the sentiment recorded in April. Optimism was particularly strong among German respondents.
Defence stocks extended their gains, with Germany’s Rheinmetall reaching a new record high, up 3.2%, and Airbus rising 2.1%. Financial shares were also in demand, driven by corporate activity in the sector. Austrian bank Erste Group saw its shares surge 8.3% after acquiring a stake in Santander’s Polish banking unit. Commerzbank also performed well, adding 2.92%.
In fixed income, benchmark German bond yields edged down 2 basis points to 2.51%. Meanwhile, the euro remained steady against the US dollar, with EUR/USD trading at 1.1313.
Australia
The Australian equity market began the week in negative territory, weighed down by weaker-than-expected earnings from Westpac and a sharp decline in energy stocks following a collapse in oil prices. The ASX 200 closed 80 points lower, falling 0.97% to finish at 8,157.80. Losses were broad-based, with all sectors in the index finishing in the red. The energy and financial sectors were the worst performers.
Westpac disappointed the market with its first-half results, reporting a net profit of $3.3 billion—down 1% compared to the same period last year. The underperformance was driven by narrowing margins amid increased mortgage competition and higher operating costs. While the interim dividend of 76 cents per share was higher than last year, it fell short of market expectations of 80 cents. This marked the first result presented under new CEO Anthony Miller. Westpac shares dropped 2.99%, or $1.00, to close at $32.45. Other major banks followed suit, with CBA down 1.61% to $166.93 and NAB falling 1.75% to $35.85. NAB and ANZ are scheduled to report results on Wednesday.
Oil prices fell more than 2.5% during Asian trade after OPEC+ announced it would increase production from June, placing pressure on energy stocks. Woodside declined 3.59% to $19.87, while Santos dropped 3.95% to $5.84.
In the materials sector, performance was mixed among bulk miners. However, gold miners outperformed as the gold price rebounded. Evolution Mining rose 2.14% to $8.12, and Emerald Resources added 0.48% to close at $4.15. Mid-cap miner Gold Road Resources surged 9.43% to $3.25 after receiving a sweetened takeover offer from South African joint venture partner Gold Fields. Rare earths producer Lynas also advanced, gaining 1.83% (15 cents) to $8.36.
Australian bond yields rose in line with global rates, with the 10-year government bond yield climbing 6 basis points to 4.27%.
In overnight futures trading the ASX200 futures fell 21 points the equivalent of 0.25%. The AUDUSD continues to strengthen trading at 0.6470.
Commodities
Oil prices fell again following the weekend announcement that OPEC+ will increase production by 411,000 barrels per day in June. West Texas Intermediate (WTI) dropped 2.06% to close at USD 57.09, down USD 1.20, while Brent crude declined 1.75% to settle at USD 60.22. Although prices fell more sharply during Asian trading hours, they recovered slightly later in the day. Over the past four months, OPEC+ has added a total of 960,000 barrels per day to global supply. This sustained increase, combined with growing concerns about an economic slowdown, has driven prices lower—even against a backdrop of ongoing geopolitical tensions in the Middle East, which would typically support higher oil prices.
Gold resumed its upward trajectory, jumping 2.85% to close at USD 3,333, a gain of USD 92.50. The surge was fuelled by renewed safe-haven demand after President Trump announced tariffs on foreign-produced movies—a move marking his first significant action targeting the services sector. Continued trade negotiations with various countries are keeping market participants cautious. Additionally, persistent weakness in the US dollar is supporting gold prices. On Monday, the Bloomberg US Dollar Index fell another 0.23%. Silver also benefited, rising 1.38% to USD 32.45.
Copper markets in the UK were closed, but on COMEX in the US, copper gained 0.60%. Iron ore settled at USD 96.40, up 15 cents from Saturday’s close. While early gains in Asian trading were driven by hopes of a reduction in US-China trade levies, those gains faded as the day progressed.
Economic Calendar
AU:
- Building Approvals (Mar) – 11.30am
China:
- Caixin Services/Composite PMI’s (Apr) – 11:45am
US:
- Trade Balance (Mar) – 10:30pm
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
