ASX gives up early gains as miners, banks and retailers decline

The mining heavyweights and financial stocks, which together make up more than half of the ASX, suffered further losses amid investor concerns about Trump’s escalating trade war.

The nation’s biggest miner BHP (down 1.8 per cent) declined, while Fortescue (down 0.5 per cent) and Rio Tinto (down 1.1 per cent) also fell.

The financials sector wound back its subdued morning gains, with all big four banks closing in the red. CBA – Australia’s biggest lender – was down 0.6 per cent, while NAB (down 0.5 per cent) and ANZ (down 0.3 per cent) also declined. Westpac lost 1.5 per cent.

Consumer discretionary stocks dipped again into the red, with Bunnings, Kmart and Officeworks owner Wesfarmers finishing down 0.8 per cent. Electronics retailer JB Hi-Fi lost 1.4 per cent, and Harvey Norman shed 1.6 per cent.

Other cyclical stocks such as media companies also suffered. Nine Entertainment fell 1.5 per cent as investors took money off the table after the stock’s more than 30 per cent gain since the start of the year. The media group, which owns this masthead, announced that acting chief executive Matt Stanton has been formally appointed on a permanent basis, after an almost six-month CEO search.

The lowdown

The local bourse started the day on a slightly more optimistic note after gains on Wall Street, which saw investors dip back into the market after two days of heavy losses, thanks to a cooler-than-forecast February inflation report for the world’s largest economy.

In the US, the S&P 500 finished 0.5 per cent higher overnight after skidding between an early gain of 1.3 per cent and a later loss. The unsettled trading on Wall Street came a day after the US benchmark briefly fell more than 10 per cent below its all-time high set last month.

The ASX followed its lead to recover as much as 0.4 per cent during the morning, however all of those gains evaporated over the afternoon as investors continued to digest Trump’s decision not to exempt Australia from America’s 25 per cent tariffs on aluminium and steel. The tariffs kicked in on Wednesday.

“Any gains that are happening in markets are being quickly eroded, and that’s because we are bracing for a bigger pullback,” says Jessica Amir, a market strategist at Moomoo.

“The market is now down almost 10 per cent from its record all-time high that we hit on Valentine’s Day … and there’s more downside to go,” she said.

The question hanging over sharemarkets is how much pain Trump will inflict on global trade through tariffs and other policies. He’s said he wants manufacturing jobs back in the United States, along with a smaller US government workforce, more deportations and other things.

Even if Trump ultimately goes with milder tariffs, damage could still be done. The dizzying barrage of on-again, off-again announcements on tariffs has already begun hurting trade relations and sapping confidence among US consumers and businesses by ramping up uncertainty. Households and businesses could pull back on spending, which would hurt the world’s largest economy.

Tweet of the day

Quote of the day

“Joe Biden handed over an economy that, while it faces some significant fiscal challenges, with deficits and debt levels that aren’t sustainable, was growing solidly. Unemployment was low and the inflation rate that was declining, albeit slowly. From this point on, Trump is responsible for economic outcomes.”

That’s Stephen Bartholomeusz on America’s economic future under the Trump administration. You can read more of his column here.

With AP