Headline: ASX 200 jumps 0.56% on US-EU trade tensions reprieve

By: Team Kalkine | May 27, 2025 | Read Time : 10 Mins

Image Source : Krish Capital Pty Ltd

Index Update: The S&P/ASX 200 rose 46.6 points (0.6%) on Tuesday to close at 8,407.6, tracking gains in US futures following a reprieve in trade tensions between the U.S. and the European Union. The equity benchmark moved closer to its record high, now just 1.7% below the 14 February 2025 peak. Over five days, it gained 0.77%. Six of eleven sectors finished higher, led by Information Technology, up 1.24% for the day and 2.44% over the week, while Real Estate dipped the most, falling 0.42%.

Macro Update: The IMF’s April 2025 World Economic Outlook highlights rising global trade tensions, especially US tariffs reaching century-high levels, causing significant growth downgrades. Global growth is now projected at 2.8% for 2025, down from 3.3%, with advanced and emerging economies both slowing. Inflation declines more slowly than expected. Risks include financial instability, debt distress, and social unrest, while coordinated policies and structural reforms are urged to stabilise trade, fiscal health, and growth prospects. With a GDP of USD 30.507 trillion, the United States remains the world’s largest economy. China is the second-largest economy in 2025, with a GDP of USD 19.231 trillion.

Top Market Movers: On Tuesday, Capstone Copper (ASX: CSC) led the gainers, rising 6.84% to AUD 8.43, followed by Neuren Pharmaceuticals (ASX: NEU) up 4.46% and Lovisa Holdings (ASX: LOV) increasing 4.22%. On the downside, Healius (ASX: HLS) fell 7.33% to AUD 0.885, Nufarm (ASX: NUF) dropped 5.6%, and REA Group (ASX: REA) declined 3.49%

Commodity Update: The dollar remained weak Tuesday amid investor worries over a major U.S. tax and spending bill that could worsen the national debt. Global stocks and the euro rose Monday while U.S. markets were closed. Focus shifts to Senate debates on Trump’s tax-cut plan. Gold fell 0.68% to USD 3,370.90, silver 0.28% to USD 33.54, and copper 0.24% to USD 9599.20. Brent crude dipped 0.12% to USD 64.62 ahead of an OPEC+ meeting.

Our Stance: The S&P/ASX 200’s recent rise shows steady progress despite global challenges such as the IMF’s growth downgrade and increased trade tensions. Information Technology outperformed while Real Estate declined, highlighting uneven sector performance. Commodity prices and the Australian dollar remain subdued amid uncertainty but gains in stocks like Capstone Copper (ASX: CSC) suggest continued investor focus on resources. Overall, geopolitical and fiscal risks call for careful monitoring.

In its latest trading session, the S&P/ASX 200 Index gained 46.60 points to close at 8,407.60, buoyed by a bullish candlestick pattern and strong trading volumes both signaling sustained investor confidence and optimism. From a technical standpoint, the index continues to trade well above its 21-period Simple Moving Average (SMA), supporting a positive near-term outlook. A critical level to monitor is resistance at 8,450.30. A decisive breakout above this threshold could mark a significant bullish shift, potentially reshaping sentiment and opening the path to further gains. On a broader scale, the index’s position above the 50-period SMA on the weekly chart reinforces its long-term bullish structure. However, maintaining the current momentum will depend on the index’s ability to surpass and hold above the 8,450.30 resistance level a move that could serve as a catalyst for renewed upward momentum.

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