United States
Initial losses in US equities—driven by a spike in bond yields following a Moody’s downgrade of US credit by one notch—were reversed throughout the trading day, with major indices ultimately finishing flat. The downgrade triggered a sell-off during Asian trading, pushing bond yields higher and equity futures lower. However, US investors viewed the dip as a buying opportunity, helping asset prices recover.
By the close, the Dow Jones Industrial Average rose 137.33 points, or 0.32%, to finish at 42,792.07. The Nasdaq Composite gained just 4 points (+0.02%) to close at 19,215.46, while the S&P 500 edged up 5 points, or 0.09%, to end the day at 5,963.
The modest gain in the S&P 500 reflected a mixed sectoral performance, with seven sectors advancing and four declining. The energy sector was the biggest laggard, down 1.55%, while healthcare led the gains, continuing its recovery after a weak start to the previous week.
Nvidia finished unchanged at $135.57 after CEO Jensen Huang unveiled a new product that will allow customers to integrate competitor chips into data centres built around Nvidia’s technology. The move acknowledges alternatives chips developed and used by major clients like Microsoft and Amazon. Microsoft shares rose 1.01%.
Oil stocks pulled back following strong gains last week. ExxonMobil dropped 1.59%, and Halliburton declined 1.79%. The clean energy sector also took a hit after Republican lawmakers proposed ending clean energy tax credits earlier than expected as part of negotiations to pass Trump’s tax and spending plans. First Solar plunged 7.59% to USD 164.92, and Enphase Energy dropped 3.21% to USD 48.78. Tesla shares finished the day with a 2.25% fall to $342.09. News that Chinese EV competitor Xiaomi was releasing a new sports utility EV to rival Telstra’s Model Y in China saw some profit taking in the stock.
US bond markets experienced notable volatility. Yields initially rose but declined by the close. The 10-year Treasury yield settled at 4.45%, down 2 basis points after reaching a high of 4.55%, while the 2-year note fell 3 basis points to 3.97%. The US dollar weakened, with the Bloomberg US Dollar Index falling 0.6%.
Europe
European equities were muted to start the week, with the Euro Stoxx 600 edging up 0.13% to close at 549.98. Mirroring the US session, early losses were clawed back as the day progressed. Sector performance was mixed, with seven of the eleven sectors posting gains. Energy lagged the broader index, while communication services led the advance.
In the UK, the FTSE 100 rose 0.17% to 8,699.31, marking a seven-week high.
Investor sentiment was supported by the announcement of a wide-ranging UK–EU agreement, described as the most significant development since Brexit. The deal includes closer security cooperation and reduced restrictions on food and visitor movements—seen as a positive step for trade relations amid ongoing global uncertainty.
The luxury goods sector reversed Friday’s gains, falling 1% on the back of weaker-than-expected Chinese retail sales data. Moncler underperformed, declining 2.2%.
Airline stocks rallied as Ryanair reported robust demand across Europe and suggested fare increases may be on the horizon. Ryanair shares jumped 4.8%, while EasyJet climbed 3.2%.
In bond markets, the 10-year German Bund yield was unchanged at 2.58%, while UK gilt yields ticked slightly higher to 4.66%.
Currency markets reflected broader USD weakness, with the euro rising to 1.1243 and the British pound strengthening to 1.3361.
Australia
US futures declined during the Asian trading session, coupled with weaker Chinese industrial production and retail sales data, causing the ASX200 to fall for the first time in eight days. The index dropped 48.6 points (-0.58%) to close at 8,295.10. Most sectors ended lower, with nine sectors in negative territory, led by energy and financials. Investors appeared cautious, balancing portfolios ahead of tomorrow’s Reserve Bank of Australia (RBA) interest rate decision. While a 25-basis point cut to 3.85% is widely expected, market participants are eagerly awaiting the Governor’s commentary for further guidance on interest rates and the RBA’s economic outlook for Australia.
In the energy sector, Woodside and Santos both fell as oil prices retreated, slipping 1.51% and 1.71%, respectively. Materials showed mixed movements. Bulk miners declined on lower copper prices, falling iron ore, and the disappointing Chinese data. BHP dropped 2.44% to close at $38.57, while Fortescue slipped 4.88% to $16.17, down 83 cents. Notably, Fortescue announced it had lodged plans to develop a 2.1-gigawatt wind farm and battery storage facility in Western Australia’s Pilbara region, aimed at supplying green energy for its operations. Offsetting some of these losses, gold miners gained ground as gold prices bounced back. Evolution Mining rose 3.18% to $8.12, and Newmont increased 2.54% to $79.39.
Investors gravitated towards more defensive stocks, with consumer staples dipping marginally by 0.13%, while utilities edged higher by 0.31%. Within consumer staples, Coles outperformed, rising 0.98% to $21.65, whereas Woolworths slipped 8 cents to close at $31.87. In the utilities sector, Meridian Energy led gains, adding 2.29% to $5.37. Continuing the defensive theme, Commonwealth Bank (CBA) climbed 1% to $171.36, in contrast to other banks which mostly declined, with ANZ suffering the largest fall of 1.73% to $28.40. Retail insurers IAG and Suncorp both retreated amid storms impacting the New South Wales coast. IAG fell 0.92% to $8.57, and Suncorp dropped 0.24% to $20.54.
Bond yields rose in tandem with US bonds as Asian traders pushed rates higher following Moody’s downgrade of the US credit rating over the weekend. The Australian 10-year yield increased by 7 basis points to 4.52%, while the 2-year yield rose 4 basis points to 3.59%.
The bounce in US equities overnight has been reflected in the ASX200 futures which have rallied 0.8%, up 66 points in the night session. The Australian dollar has also risen against the US trading at 0.6457, a jump of 0.79% as traders await the RBA meeting today.
Commodities
Gold rose 0.83% to close at US$3,230, as increased volatility across asset markets prompted investors to seek safe-haven assets. Investor concerns were not limited to US bond movements—comments from Treasury Secretary Bessent also contributed to market unease. Bessent warned that the US would reinstate tariffs initially proposed in early April if trading partners failed to negotiate in “good faith.”
Silver posted a modest gain, rising 0.20% to US$32.36.
Bitcoin continued its upward trajectory, gaining 1.3% to trade at US$105,448. The rally was helped by remarks from JPMorgan CEO Jamie Dimon, who stated the bank will now allow customers to purchase cryptocurrencies—marking a shift in tone from his historically sceptical stance.
Oil prices edged slightly higher amid fading hopes for a US-Iran nuclear agreement. A breakdown in negotiations would reduce the likelihood of additional oil supply entering the market. West Texas Intermediate (WTI) rose 0.26% to USD 62.65, while Brent crude added 0.14% to settle at USD 65.50.
Copper prices recovered most of Friday’s losses, increasing US$76 (+0.80%) to settle at US$9,524 per tonne on the London Metal Exchange. Iron ore was more volatile during the session but closed slightly lower in New York, declining US$0.20 (-0.20%) to end at US$99.65.
Economic Calendar
AU:
- RBA Interest Rate Decision – 2:30pm
- RBA Governor Bullock Media Conference – 3:30pm
China:
- Loan Prime Rates – 11:00am
US:
- Philadelphia Fed Non-Manufacturing Activity (May) – 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.
