Source : THE AGE NEWS
The Australian sharemarket has fallen after US President Donald Trump’s attacks on Federal Reserve chairman Jerome Powell sent Wall Street into a slide.
The market, expected to open slightly higher with futures pointing to a rise of 47 points, instead was down after opening, sliding 0.65 per cent, or 50.70 points, to 7768.40.
The ASX reopened on Tuesday after the Easter long weekend, but was down in the morning.Credit: Getty Images
The 0.65 per cent dip in the ASX/S&P200 at 10.20am on Tuesday was a slight recovery from a 1 per cent drop earlier in the morning. The Australian dollar is trading at US64.03¢.
Information technology and energy sectors were hit the hardest, both down 1.82 per cent, followed by real estate, down 1.46 per cent. All sectors were down at 10.30am.
Energy company Yancoal (down 2 per cent) lost ground, Woodside fell 1.54 per cent and Ampol dropped 1.2 per cent. The brunt of the morning’s drop was felt by the embattled IT firm WiseTech, which lost 2.15 per cent, and TechnologyOne (down 1.8 per cent).
The hardest-hit companies overall were Meridian Energy (down 3.5 per cent) and miner South 32 and data centre operator NEXTDC (both down almost 2.8 per cent).
However, other miners felt the strongest growth of the morning, with Evolution, De Grey and Northern Star Resources all up more than 1 per cent.
Macquarie Group was one of the few financial institutions to have positive growth on Tuesday morning (up 0.27 per cent), after announcing a $2.8 billion sale of its US and European assets to Japanese firm Nomura.
A shortened week of relative calm was expected on the Australian sharemarket, but traders are on “Trump watch” as they digest the prospect of a global recession resulting from the US president’s erratic approach to economic policy.
Heavy selling lashed Wall Street anew on Monday, with longer-dated Treasuries joining stocks and the dollar in a deepening slump, after Donald Trump’s rejection of Jerome Powell’s policy on interest rates sowed angst among investors already coping with a global trade war.
Trump’s assurances that tariff talks were progressing did little to stop the rout. The S&P 500 and other major US stock indexes tumbled about 3 per cent each in light trading, while a gauge of the US dollar weakened to a 15-month low. After a late recovery, the S&P 500 was down 2.4 per cent.
The benchmark 10-year fell with the yield reaching 4.4 per cent. As investors turned away from US securities, haven assets climbed. Gold jumped to another record, above $US3400 an ounce, while the Swiss franc gained more than 1 per cent against the US dollar.
Trump took to Truth Social to escalate his attack on Powell, and insisted there was “virtually” no inflation, and it was time for “preemptive cuts”.
The ASX was closed on the Good Friday and Easter Monday public holidays and will trade for only three days this week, closing on Friday for Anzac Day.
“I suspect, as we have been for the last month or two, we’ll be on Trump watch,” said Stephen Miller, an investment strategy consultant at GSFM. “We have seen some mitigation of the ‘Liberation Day’ announcements. But they’ve been just that – mitigation, not eradication.”
Companies and investors are grappling with an aggressive tariff landscape poised to keep shifting and fuelling worries about a recession as Trump’s administration negotiates with a range of countries. While he has paused some of the heftiest levies on imports, the US is also locked in an escalating trade battle with China, the world’s second-largest economy.
“The prospects of a global recession are growing, and I think they’re trying to calibrate what that might imply for markets,” Miller said. “Personally, I’m a little on the pessimistic side. I suspect that the prospects of a recession this year are greater than 50 per cent.”
Closer to home, Purchasing Managers’ Index data for April will be released on Wednesday. These reports will provide a snapshot of the impact of reciprocal tariffs on manufacturing and services sectors.
AMP chief economist Shane Oliver said the May 3 election would continue to “bubble away in the background”.
The fallout from Trump’s reciprocal tariff announcements is expected to continue. Credit: Bloomberg
“You could argue that the Coalition is probably going to spend a bit more in the short term … Labor a bit more in the longer term,” Oliver said. “But whoever wins, we’re certainly facing pretty big budget deficits.”
In the US, a heavy slate of company results in the coming week will test a sharemarket shaken by the US trade policy overhaul that upended the outlook for the global economy and corporate America.
Elon Musk’s electric vehicle maker Tesla, which reports results on Tuesday, will be in the spotlight this week in part because of the billionaire’s close ties to Trump.
Boeing’s results are also in focus, after China reportedly ordered its airlines not to take further deliveries of the plane maker’s jets. IBM, Merck, Intel and Procter & Gamble are among the major US companies set to post results in the coming week.
Investors will be hoping that the heart of earnings season can restore more calm to markets.
With Reuters, Bloomberg
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