There’s only one way for the Australian markets to go following the latest news of a 25% tariff slapped on Australian steel and aluminium by the US under Trump.
We’re just the latest loyal US ally and trading partner to be rewarded with this entirely unprovoked economic kiss of death, and it remains to be seen whether Canberra will retaliate with tariffs of its own.
US equity markets slumped on Tuesday as the US regime escalated its pointless trade war, announcing fresh tariffs on Canadian imports and raising concerns over potential economic fallout as Wall Street reckoned with the reality that Trump isn’t joking.
Trump doubled tariffs on steel and aluminium imports from Canada to 50% in response to Ontario’s decision to impose a 25% duty on electricity exports to the US.
The administration also warned of further tariff increases on car imports, set to take effect on April 2.
Immediate impact on US businesses
The effects of the new president’s actions were immediately felt, with Ford and Stellantis both falling around 3%, and Delta Air Lines sliding 7.3% after halving its first-quarter profit forecast.
Conversely, Southwest Airlines jumped 8.3% after announcing the end of its free baggage policy.
Department store chain Kohl’s plummeted 24.1% due to a larger-than-expected drop in annual comparable sales.
In contrast, technology giants Nvidia and Tesla gained 1.7% and 3.8%, respectively.
Markets pared some losses late in the session after Trump suggested he may reconsider the tariff hikes following Ontario’s decision to pause its energy charge – but it’s uncertainty that is really troubling the markets. No one can say what the next directive will be.
A straitened Ukraine, plied by a renewed assault from Russia in the wake of withheld US intelligence, unsurprisingly signalled its readiness to accept a short, US-backed 30-day truce with Russia. Just long enough for Putin to regroup.
The Dow Jones Industrial Average fell 478 points (-1.1%), the S&P 500 declined 0.8%, while the Nasdaq slipped just 0.2% after earlier dipping into correction territory.
European sharemarkets fell to their lowest levels in over a month. The travel and leisure sector led losses, down 3.5%, with International Airlines Group (IAG) sliding 6.1%, Lufthansa declining 5.3%, and Entain losing 2.6% after Delta Airlines' earnings warning heightened fears of slowing economic growth.
The pan-European FTSEurofirst 300 index dropped 1.8%, while the UK’s FTSE 100 fell 1.2%.
US Treasury yields climbed as risk aversion eased slightly following Monday’s market rout. January job openings data exceeded expectations, prompting early losses in bonds.
The US Treasury auctioned US$58 billion in three-year notes at a yield of 3.908% amid strong demand. The US 10-year Treasury yield rose 7 basis points to 4.28%, while the two-year yield increased 5 basis points to 3.95%.
Currency and commodity markets
The US dollar was mixed against major currencies.
- The euro strengthened from US$1.0835 to US$1.0945, settling near US$1.0915 at the US close.
- The Australian dollar edged up from 62.62 US cents to 63.10 US cents before closing at 62.95 US cents.
- The Japanese yen weakened from JPY146.79 to JPY148.08 per US dollar, finishing near JPY147.85.
Oil prices inched higher, supported by a weaker US dollar but capped by concerns over global economic growth.
- Brent crude rose US28 cents (+0.4%) to US$69.56 per barrel.
- US Nymex crude gained US22 cents (+0.3%) to US$66.25 per barrel.
Base metals traded mixed. Copper futures jumped 2.2%, buoyed by a weaker US dollar and a decline in London Metal Exchange inventories.
- Aluminium futures edged down 0.1%. Iron ore futures gained US6 cents (+0.1%) to US$101.05 per tonne, with demand expected to rise as Chinese steelmakers resume production post-parliament session.
- Gold prices surged as investors sought safe-haven assets for obvious reasons. Gold futures climbed US$21.50 (+0.7%) to US$2,920.90 per ounce, while spot gold settled near US$2,915 per ounce.
What about small caps?
The S&P/ASX Small Ordinaries (XSO) took a 2.55% dive yesterday and is currently down 3.73% over the past five trading days.
The news is flowing this morning and you can read about the following and more throughout the day.
- Brookside Energy Ltd has achieved key milestones in the drilling of the Bruins Well, located in the SWISH Area of Interest (AOI) in the Anadarko Basin, Oklahoma.
- Provaris Energy Ltd has signed a second non-binding Memorandum of Understanding (MOU) for hydrogen supply from Norway to Germany, leveraging its proprietary compressed hydrogen carriers.
- Great Boulder Resources Ltd continues to move forward with exploration drilling at priority targets within its flagship Side Well Gold Project near Meekatharra in Western Australia which hosts a Mineral Resource Estimate (“MRE”) of 668,000oz @ 2.8 g/t Au. RC drilling has intersected thick, high-grade gold at the Eaglehawk Prospect with a significant result of 29m @ 4.79g/t Au from 76m, including 4m @ 20.50g/t Au from 92m in 25MBRC002.
- Element 25 Ltd has received the final statutory approval from the WA Department of Water and Environmental Regulation (DWER) for its planned expansion of the 100%-owned Butcherbird Manganese Mine in Western Australia to 1.1Mpta1 manganese concentrate production. This is an important milestone and now sees the Butcherbird Expansion Project (BBX) fully approved under the Western Australian mining regulatory framework.
- Evion Group Ltd’s maiden shipment is underway as export revenues, with cash flow expected to grow in India. First shipments of 80mt of expandable graphite have left site to EVG’s offtake buyer in Europe – delivering around A$400,000 in sales and revenue to the JV (50/50).