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US open: Selling pressure resumes on geopolitical uncertainty

Tue 18 March 2025 11:31 | A A A

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(Sharecast News) - US stocks pulled back sharply on Tuesday after two days of gains despite economic data coming in ahead of expectations.

Bargain-hunting had fuelled a two-day rally after trade war concerns sent the S&P 500 to a fresh six-month low on Thursday last week. However, the selling pressure resumed with markets keeping a close eye on geopolitics, while risk appetite was scaled back ahead of a number of central bank meetings.

The Dow was down 0.9% by 1152 in New York, while the S&P 500 dropped 1.3% and the Nasdaq slumped 1.9%.

Investors were keeping a close watch on developments between presidents Donald Trump and Vladimir Putin ahead of a scheduled call to discuss ending Russia's war with Ukraine.

"It's difficult to know what may come out of this, but hopefully it will distract Mr Trump from issuing more tariffs on US trading partners," said David Morrison, senior market analyst at Trade Nation. "Stock indices dipped on an early report which claimed that Putin has demanded a halt in the supply of all arms to Ukraine."

Meanwhile, commodity prices were on the rise on Tuesday after military strikes resumed in Gaza, with more than 400 people reportedly killed by Israeli attacks. WTI crude was up more than 1% on speculation that a further escalation of conflict across the region could affect supplies, though gains were trimmed by the mid-morning session; while safe-haven demand was pushing gold prices to new record highs, with Comex futures up 1.1% at $3,038.90 an ounce.

Investors were also beginning to look ahead to central bank meetings from across the globe - policymakers are meeting in the UK, Europe and Switzerland - with the Federal Reserve concluding its policy meeting on Wednesday afternoon.

"The S&P 500 is coming up against some key resistance at 5,700, which may limit further upside for the main US blue chip index until after tomorrow's FOMC decision," said Kathleen brooks, research director at XTB. "We don't expect the Fed to change policy on Wednesday; but the updated economic forecasts and dot plot will be crucial for the direction of asset prices later this week."

In equity news, Alphabet was down more than 3% after agreeing to buy cloud security start-up Wiz in a blockbuster $32bn deal, the Google parent confirmed on Tuesday. The US tech giant said the all-cash deal - its largest-ever - would accelerate two "large and growing trends in the AI era", cloud security and the ability to use multiple clouds. Wiz will become part of Google's cloud division, Google Cloud.

A raft of second-tier economic data came in ahead of forecasts, but failed to move markets substantially.

According to the Department of Commerce, in seasonally adjusted terms industrial output grew by 0.7% during the month of February, ahead of the 0.2% gain expected.

Housing starts surged by 11.2% over February to a seasonally adjusted annual rate of 1.50m, the Census Bureau reported, coming in well ahead of the 1.38m expected by consensus. Building permits - closely watched as an indicator of future housing activity - fell by 1.2% in February to 1.46m, but still marginally above the 1.45m predicted by analysts.

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