Wall Street opened lower as the S&P 500 slipped to a five-week low, and the Nasdaq dropped 0.70%, marking its fourth consecutive session of losses. Meanwhile, defensive sectors within the Dow helped it recover, climbing 200 points. Investor sentiment remained under pressure from ongoing geopolitical and trade tensions, particularly following President Trump’s confirmation that tariffs on Mexican and Canadian imports would proceed as planned after a month-long pause. This news led to a 10bps decline in 10-year Treasury yields. Furthermore, reports emerged indicating that the US is tightening restrictions on China’s semiconductor industry. The technology, communication services, and utilities sectors were the worst performers, while real estate, materials, and consumer staples outperformed.

The South African rand remained stable on Tuesday, amid market caution surrounding US President Donald Trump's tariff plans and geopolitical stance. At 15h01, the rand was trading at 18.3725 against the US dollar, just shy of its previous close of 18.3750. The dollar had weakened by about 0.40% against a basket of currencies. Investors took a cautious approach following Trump's comments about proceeding with tariffs on Mexico and Canada.

In the UK, the FTSE 100 closed largely unchanged, with gains in healthcare and defence stocks offsetting losses in retail and mining. Smith & Nephew saw a significant 6% rise, its largest increase since July 2024, following positive guidance despite challenges in China. Analysts pointed to strong performance in the US orthopaedics market and improved margins. BAE Systems also gained over 4% after Prime Minister Keir Starmer announced plans to boost UK defence spending to 3% of GDP over the next decade.

Across Europe, markets mirrored the UK and the US, with most indices closing near the flatline on Tuesday, marking the fourth consecutive session of subdued movement. Investors continued to assess the outlook for higher government spending by European nations and the impact of US-imposed trade barriers. The Eurozone’s STOXX 50 ended 0.11% lower at 5 448, while the pan-European STOXX 600 rose by 0.20% to close at 554. German automakers were among the top gainers, despite President Trump’s announcement of ongoing tariff plans for Mexico, a major manufacturing hub for European automakers. Volkswagen, BMW, and Mercedes-Benz saw their stocks rise between 1.50% and 3.60%.

In Asia, Japanese markets also traded in the red, with the Nikkei 225 Index falling by 1.39% to close at 38 238, and the broader Topix Index dropping 0.43% to 2 725. This marked a five-week low, as Japanese stocks mirrored Wall Street’s overnight losses. The downturn was driven by a pullback in technology and artificial intelligence stocks, raising concerns that the AI-driven rally might be losing momentum. However, some analysts remain optimistic, suggesting the AI sector could continue to thrive in the long term. Traders in Japan are awaiting a series of economic reports due on Friday, which could offer new insights into the Bank of Japan’s future monetary policy.

In China, the Shanghai Composite fell 0.80% to close at 3 346, while the Shenzhen Component dropped 1.17% to 10 854 on Tuesday, extending losses from the previous session. Technology stocks led the decline, following reports that the Trump administration is planning to tighten semiconductor restrictions on China, continuing the Biden administration's efforts to limit China’s access to critical US technologies.

In commodities, WTI crude oil futures slipped below $69 per barrel on Tuesday, nearing their lowest point since 10 December, amid concerns surrounding President Trump’s foreign policies and broader worries about the US economy. Meanwhile, gold fell below $2 900 per ounce, as investors took profits following a record-breaking session. On Monday, bullion had reached an all-time high, driven by safe-haven demand due to concerns over US trade policies.