United States
Investors paused their recent push higher on Tuesday, with US equity indexes pulling back amid underwhelming corporate earnings and a sharp rise in oil prices, both of which tempered bullish sentiment. Adding to the uncertainty, trade negotiations between the US and China concluded without any clarity on whether the current truce—set to expire in mid-August—will be extended.
All major US indices closed lower. The Dow Jones Industrial Average declined by 204 points or 0.46%, ending the session at 44,632. The Nasdaq Composite dropped 80 points (-0.38%) to close at 21,098, while the S&P 500 fell 19 points, or 0.38%, to 6,370.86. Sector performance was mixed, with seven sectors ending in the red and four posting gains, led by real estate and energy.
Several earnings reports disappointed investors. UnitedHealth fell short of expectations as the company faced rising medical costs in its Medicare Advantage plans. Whirlpool shares plunged 13.43% after the appliance manufacturer cited tariffs as a factor in its earnings miss. United Parcel Service (UPS), often viewed as a bellwether for US economic activity, dropped 10.57% after marginally missing earnings expectations. The company once again withheld revenue and margin forecasts, with the CEO noting, “Changes in trade policies are impacting global trade and demand. It will likely settle down at some point, but for now it’s a very volatile environment.”
However, not all earnings news was negative. Corning, a materials science and technology company, surged 11.86% after posting stronger-than-expected second-quarter results. Energy stocks also moved higher, supported by a jump in crude oil prices.
Technology stocks were mixed ahead of upcoming earnings reports from Meta, Microsoft, and Apple. Meta shares fell 2.46% as traders reassessed their risk exposure, while Alphabet (Google) rose 1.56% to close at $196.43.
Economic data released on Tuesday showed a decline in job openings and hiring activity, according to the JOLTS report for June. The steepest declines were seen in the accommodation and food services sectors, pointing to a potential cooling in the labour market.
All eyes now turn to the Federal Reserve’s interest rate decision, due later today. Markets widely expect the Fed to hold rates steady, but the post-meeting press conference may offer additional insights into the board’s outlook and potential timing for future cuts.
In bond markets, yields declined across the curve following stronger-than-expected demand in a 7-year bond auction. The 10-year Treasury yield fell 9 basis points to 7.32%, the 30-year dropped 10 basis points to 4.86%, and the 2-year note declined 5 basis points to 3.87%.
Europe
Germany’s DAX index surged over 1% for a second consecutive session on Tuesday, as European investors welcomed a trade deal that proved less damaging than feared. The rally helped lift the broader EuroStoxx 600 by 0.29%, closing at 550.36. Sector performance was mixed, with six sectors finishing higher—led by communication services—while five declined, with healthcare posting the largest losses. The UK’s FTSE 100 also advanced, rising 0.6% to close at 9,136.
Gains across the region were tempered by a sharp decline in shares of Novo Nordisk, which tumbled 23.11%. The pharmaceutical giant, known for its weight-loss drug Wegovy, issued a profit warning and announced the appointment of a new CEO amid intensifying competition in the obesity drug market. The company also halved its sales growth guidance, surprising analysts and disappointing investors. One portfolio manager remarked, “The stock has gone from being a market darling to one of its biggest letdowns.”
In contrast, UK-based AstraZeneca delivered stronger-than-expected results, with shares rising 3.41%. The company announced plans to cut drug prices in the US and outlined an ambitious expansion strategy, including potential investments of up to US$50 billion in the American market.
Defence sector stocks rebounded after three days of declines, supported by mutual exemptions on aircraft and parts between the EU and US. Healthcare technology firm Philips also rallied, jumping more than 9% after revising down the expected impact of tariffs following the trade agreement. The broader benefit of the deal, according to market participants, lies in the restored ability for European businesses to plan with greater certainty after months of ambiguity.
In fixed income markets, continental bond yields moved higher. Germany’s 10-year Bund yield rose by 2 basis points to 2.79%
Australia
The Australian equity market recovered from early session losses to post a modest gain on Tuesday, as investors awaited further clarity on Australian tariff levels and the release of quarterly CPI data. By the close, the ASX200 had edged up 7 points (+0.08%) to finish at 8,704.60. Seven sectors recorded slight gains, with energy leading the pack, up 0.65%.
Economists expect today’s inflation data to show a quarterly rise of 0.8%, translating to an annual rate of 2.2%. The trimmed mean CPI, the Reserve Bank of Australia’s preferred inflation gauge, is forecast to show an annual rate of 2.7%. At that core level, economists believe the RBA will feel confident that inflation is trending in the right direction, potentially paving the way for a rate cut at its August meeting. Bond markets were relatively quiet ahead of the CPI release, with the 10-year yield holding at 4.32% and the 2-year yield easing 2 basis points to 3.39%.
The energy sector was the day’s best performer, driven by Woodside Energy, which rose 1.57% (41 cents) to close at $26.60. The company announced an agreement with ExxonMobil Australia to take over operations at their Bass Strait joint venture assets. The agreement does not change the ownership interests of either party but is expected to deliver economies of scale for Woodside worth over $60 million. Meanwhile, fallout in uranium miners continued from Boss Energy’s recent guidance downgrade, with the stock sliding another 5.51%. Deep Yellow dropped 5.17%, and Paladin Energy fell 5.79%.
Among the banks, most traded slightly lower, except for NAB, which continued to attract buyers following recent underperformance. NAB shares rose 44 cents (+1.17%) to end the session at $38.20.
Viva Energy Group declined 6.39% after reporting lower sales volumes for the first half of the year. While retail fuel margins improved in the second quarter, convenience store sales fell 10%, primarily due to a drop in tobacco sales.
Investor sentiment remained cautious after President Trump warned that countries without a formal trade agreement by the deadline could face tariffs of 15–20%. For Australia, this would represent an increase from the current 10% tariff on general goods exported to the U.S.
Equity futures declined overnight, mirroring the weakness in US markets. SPI futures fell by 7 points, or 0.8%, indicating a softer open for the Australian share market. The Australian dollar also edged lower, starting the day at 0.6511 as traders await the release of quarterly CPI data.
Commodities
Oil prices surged to one-month highs after US President Trump issued a 10-day ultimatum to Russia to reach a truce with Ukraine or face economic sanctions. West Texas Intermediate jumped 3.75% to close at US$69.21, while Brent crude climbed US$2.63, or 3.76%, to settle at US$72.67.
Adding to the pressure, US Treasury Secretary Bessent warned Chinese officials that under newly passed secondary tariff legislation, China could face higher tariffs if it continues purchasing Russian oil. However, any sustained rally in oil may be capped by rising supply, with OPEC+ expected to meet soon to discuss another potential production increase for September.
Iron ore resumed its upward momentum, closing at US$103.55 in New York—up 2% or US$2.05 in the past 24 hours. Recent trading has been marked by heightened volatility as markets digest evolving US trade policies and signs of stabilisation in Chinese economic growth.
Copper was little changed, gaining US$5 to settle at US$9,798. Gold inched higher by 0.36% to US$3,326, as investors look ahead to key US economic data, including inflation and jobs figures later in the week. Silver was flat, closing at US$38.21.
Economic Calendar
AU:
- Inflation Data (CPI) – (June Quarter) – 11.30am
EU:
- GDP Growth- Q2 – 7:00pm
US:
- ADP Employment Change (Jul) – 10:15pm
- Pending Home Sales (Jun) – 12:00am
- FOMC Interest rate decision – 4:00am
- FOMC Press Conference – 4:30am
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
