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Global markets stabilise as Aussie dollar rallies following RBA rate hike

Global markets were in recovery mode on Tuesday after last week’s turbulence in metals and recent equity volatility, with investors drawing confidence from resilient macroeconomic data and easing fears of a deeper correction. In the Asia-Pacific region, Australia’s central bank rate hike and a sharply stronger Aussie dollar set the tone, while a landmark US–India trade deal and renewed enthusiasm for AI-related technology stocks helped propel Indian, Japanese and Korean benchmarks markedly higher. Wall Street had already started the week on a firmer footing with US equities rebounding on Monday as both ISM and S&P Global manufacturing surveys signalled expansion. European bourses also rallied. Precious metals also bounced back strongly, with gold and silver retracing part of their historic sell-off.

  • Date
  • Auteur Shane Strowmatt, Senior Investment Writer
  • Temps de lecture 5 minutes

Reserve Bank of Australia
© Shutterstock

Australia’s central bank raised its policy rate by 0.25 percentage points to 3.85% on Tuesday, its first increase since November 2023, after inflation accelerated to its highest level in six quarters. The Reserve Bank of Australia said domestic demand is stronger than expected, capacity constraints are more pronounced and the labour market remains tight, leading to a material pickup in price pressures in the second half of last year. Officials have consistently argued that near-term rate cuts are unlikely, and Governor Michele Bullock has reiterated that future moves will depend on incoming data assessed on a meeting-by-meeting basis as growth picked up to 2.1% in the third quarter. Australia’s dollar strengthened about 1% to above 0.70 against the US dollar, while the S&P/ASX 200 rose 1.1% after the central bank decision.

Asia stocks rally on AI optimism and India trade deal

Asian equities rebounded sharply on Tuesday, led by South Korea and Japan, as investors returned to AI-related technology and chipmakers after recent profit-taking, betting that strong long-term demand for high-end memory and processors will continue to support the sector. Japan’s Nikkei 225 was trading 3.9% higher and Korea’s Kospi was up 6.3%. India’s Nifty 50 index also surged, jumping more than 3% after US President Donald Trump announced a trade agreement that cuts US tariffs on Indian goods to 18% from 50% in exchange for New Delhi phasing out Russian oil purchases and increasing imports from the US. Hong Kong’s Hang Seng Index was little changed and mainland China’s CSI 300 was 0.8% higher.

Gold and silver rebound after rout

Gold and silver prices recovered on Tuesday after an exceptional sell-off late last week, when gold dropped nearly 10% on Friday and silver fell about 30% in their steepest single-day declines in decades. Gold was priced about 4% higher around USD 4850 per ounce after recent sharp swings, while silver was nearly 7% firmer, trading under USD 85 per ounce. Despite recent price swings, the longer-term thematic drivers supporting precious metals – such as geopolitical risk, policy uncertainty and industrial demand for silver – remain intact.

US equities upbeat on solid PMI data

US stocks recovered from recent weakness on Monday, with the Dow Jones Industrial Average rising 1.1%, the S&P 500 gaining 0.5% and the Nasdaq 100 advancing 0.7%. Technology names including Apple, Cisco, IBM and several chipmakers were in demand, while software group Oracle fell after plans to raise USD 45-50 billion to expand its cloud business. Macroeconomic data supported market sentiment, with US manufacturing activity moving back into expansion in January, according to the ISM Manufacturing Purchasing Managers' Index (PMI), which rose to 52.6 from 47.9 in December, ending a 12‑month stretch of contraction and pointing to solid overall economic growth. Likewise, the S&P Global US Manufacturing PMI rose to 52.4 in January from 51.8 in December, indicating a stronger expansion in factory activity broadly in line with the long-run average.

Eurozone manufacturing shows tentative improvement

Euro-area manufacturing conditions remained mildly contractionary in January, with the Eurozone Manufacturing PMI edging up to 49.5 from 48.8 in December. The Output Index moved back into expansion at 50.5, marking the tenth rise in production in the past eleven months, but overall momentum was held back by a third consecutive monthly fall in new orders and continued job cuts and inventory reductions. The Euro Stoxx 50 rose 1% on Monday.

German retail sales rise in 2025

German retailers increased their price-adjusted turnover by 2.7% in 2025 compared with 2024, with nominal sales up 3.8%, according to data released on Monday. Growth was stronger in the first half of the year at 3.8% before easing to 1.7% in the second half, partly due to a one-off effect from the restructuring of a major online and mail-order retailer that added previously unrecorded domestic sales. Germany’s DAX gained 1.1% on Monday.

Swiss retail sales accelerate in December

Retail sales rose 1% in real terms in December from November, reversing a 0.1% decline in November, according to data released on Monday by the Federal Statistical Office. Excluding service stations, monthly retail turnover increased 1.2%, the strongest gain since June, when sales had climbed 2.3%. Compared with a year earlier, real retail sales growth picked up to 2.9% from 1.7% in November. The Swiss Market Index outperformed other European indices with an increase of 1.7% on Monday.

Corporate and economic calendar

Corporate news in focus: Quarterly figures from AMD, Amgen, Chubb, Eaton, Merck, PepsiCo, and Pfizer.

Economic data in focus: French Consumer Price Index (08:45) and US Job Openings and Labor Turnover Survey jobs report (16:00).

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Editor: Alessandro Fezzi
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