On Tuesday, the S&P/ASX 200 index declined by 0.5% to close at 8,655, erasing gains from the previous day. This shift was driven by diminishing optimism around trade agreements. Investors are now concentrating on the renewed trade discussions between the US and China, following the recent US-EU trade deal announcement. There is growing anticipation that the current 90-day suspension of tariffs between Washington and Beijing might be prolonged. Adding to market concerns, President Trump mentioned that the global baseline tariff rate might stabilize "in the range of 15 to 20%."
In terms of monetary policy, the Reserve Bank of Australia has indicated a cautious stance, closely monitoring two critical economic indicators before making a decision on a possible interest rate cut. These indicators include the June labor force data and the second quarter inflation figures, both of which are expected to be released later this week. Among the sectors, banking stocks saw notable declines, with Westpac Banking Corporation sliding by 1.2%, Commonwealth Bank of Australia dropping by 1.1%, and National Australia Bank decreasing by 0.9%.
