The ASX is set to dip today with ASX 200 futures down 0.8 per cent to 8,405 points this morning. It follows severe losses on Wall St, which saw the S&P 500 and Dow Jones close down 1% and the technology-focused Nasdaq shed 1.4%.
The ASX 200 closed 20 points lower (-0.24%) at 8,511 last week, recouping most of its earlier losses following Monday’s sharp sell-off. Market sentiment improved as China’s measured response to new US tariffs eased fears of escalating trade tensions.
Health Care (-3.28%), Utilities (-2.13%), Energy (-1.54%) and Consumer Staples (-1.26%) were the weakest-performing sectors, weighing on the index. Meanwhile, Information Technology (+1.99%), Materials (+1.73%), Telecommunications (+0.60%) and Financials (-0.08%) provided relative strength.
Among individual stocks, Cettire (-16.55%), Strike Energy (-12.77%), Beach Energy (ASX:BPT) (-10.49%) and Zip (ASX:ZIP) (-9.84%) recorded steep declines. On the other hand, Pact Group (+29.63%), Domino’s Pizza (+19.41%), Articore (+11.36%) and Nick Scali (+11.32%) posted strong double-digit gains.
Reporting season
“The ASX reporting season picks up the speed this week, with reports from companies including CBA, CSL and JB Hi-Fi. In the economics space the focus will be on the Westpac Consumer Confidence Index for February, set for release on Tuesday,” IG Markets analyst Tony Sycamore notes.
“In January, Consumer Confidence fell by 0.7% to 92.1, marking its second consecutive monthly decline. Last week’s headlines about tariffs and trade wars may offset some of the positive news that came with the better-than-expected Q4 inflation numbers, which have paved the way for the RBA to cut rates next week.
“The Australian interest rate market starts the week pricing in a 22bp of rate cuts for February. A total of 85bp of RBA rate cuts are anticipated for 2025, bringing the cash rate to 3.50% by year-end.”
Tariffs trump market sentiment
US stock markets closed a volatile week with mixed results as investors weighed the potential for additional tariffs from the Trump administration, rising inflation expectations, and a mixed jobs report. The S&P 500 edged 0.24% lower, while the Nasdaq posted a modest 0.06% gain. The Dow Jones fell 241 points.
The closely watched US Nonfarm Payrolls report delivered mixed signals. Payrolls increased by 143,000 in January, missing the forecast of 175,000.
However, the Bureau of Labor Statistics (BLS) stated that weather and wildfires had "no discernible effect on national payroll employment, hours, and earnings."
Despite the headline miss, the report pointed to labour market resilience, with upward revisions of 100,000 jobs over the past two months and an unexpected decline in the unemployment rate to 4.0% from 4.1%.
Adding to inflation concerns, the University of Michigan’s consumer sentiment report showed one-year inflation expectations climbing to 4.3% from 3.3%, the highest level since November 2023.
“Investor anxiety increased further with reports that President Trump was considering reciprocal tariffs, though specific countries were not identified. The overall outcome of these developments was a downturn in stocks, while the US dollar and yields ended the week on the front foot,” Sycamore wrote.
“Looking ahead, the focus will be on the CPI report for January and Fed Chair Powell’s testimony before Congress. Q4 2024 earnings season continues, with reports set to drop from companies including SuperMicro, Dash, Lyft (NASDAQ:LYFT), Robinhood (NASDAQ:HOOD), Coinbase (NASDAQ:COIN) and Airbnb (NASDAQ:ABNB). The rates market finished the week pricing in 39bp of Fed rate cuts for 2025, down from 49 bp on Thursday night.”
European decline
Sharemarkets declined in Europe on Friday, led by a 1.6% drop in the auto sector. Porsche (ETR:P911_p) fell 7.1% — its steepest decline since listing — after warning that rising costs for new models and battery-related expenses would weigh on its 2025 profits.
- The continent-wide FTSEurofirst 300 index slipped 0.4% but gained 0.7% over the week.
- In London, the FTSE 100 index fell 0.3% on the day but ended the week 0.3% higher.
Currencies and commodities
Currencies
Currencies were mixed against the US dollar in European and US trade.
- The euro declined from US$1.0400 to US$1.0312, settling near US$1.0325 at the US close.
- The Australian dollar eased from US$0.6298 to US$0.6256, recovering slightly to US$0.6270.
- The Japanese yen strengthened from JPY152.31 per US dollar to JPY150.94 before closing near JPY151.40.
Commodities
Oil prices rose on Friday after new sanctions were imposed on Iran’s crude exports. However, weekly losses persisted as concerns mounted over renewed US-China trade tensions and potential tariffs on other nations.
- Brent crude gained US$0.37 or 0.5% to US$74.66 per barrel.
- US Nymex crude rose US$0.39 or 0.6% to US$71.00 per barrel.
- Brent fell 1.3% over the week, while Nymex declined 2.1%.
Base metal prices climbed, with copper futures surging 2.9% to a three-month high as China’s return from the Lunar New Year holidays eased trade concerns.
- Aluminium futures edged 0.1% higher. Over the week, copper soared 7.5%, and aluminium gained 1.5%.
- Gold futures advanced US$10.90 or 0.4% to US$2,887.60 an ounce as escalating US-China trade tensions drove safe-haven demand. Spot gold traded near US$2,861 at the US close after reaching a record high of US$2,886.62 earlier in the session, posting a 1.9% gain for the week.
- Iron ore futures added US$0.14 or 0.1% to a near four-month high of US$106.37 per tonne, rising 0.6% over the week as steel demand in China rebounded post-holiday, supported by renewed optimism in the property sector.
What about small caps?
The S&P/ASX Small Ordinaries (XSO) finished Friday 0.031% higher to 3,229.10. Over the past five days, it is down 0.15%.
It has been a steady start to the week for newsflow and you can read about the following and more throughout the day.