By Nick Newling
Welcome to your five-minute recap of the trading day.
The numbers
The Australian sharemarket has closed slightly down after a stuttering morning and an afternoon rally. The energy sector suffered the biggest blows of the day.
Donald Trump called on China to reach out to him to kick off negotiations.Credit: Bloomberg
The S&P/ASX200 dropped by 2.80 points, or 0.04 per cent, to 7758.90 points, mirroring gyrations on Wall Street as US President Donald Trump’s fast-evolving tariff war with top trade partners shows little signs of abating. The Australian dollar was at US63.50¢ just after 4pm.
Local sectors were mixed, with energy taking the biggest hit as it fell by 2.65 per cent. Health fell by just under 1 per cent followed by materials, which had a 0.75 per cent drop.
The day’s strongest sector was financials, which grew by 0.82 per cent, followed closely by consumer staples at 0.71 per cent.
The lifters
Insurance companies were some of the strongest earners for the day. Insurance Australia Group was up by 2.06 per cent, followed by QBE, which jumped 1.96 per cent, and Medibank at 1.81 per cent.
Big banks were also trading well, with Suncorp up 1.68 per cent, followed by Westpac with a 1.5 per cent lift. CBA edged up 0.8 per cent to a two-month-high of $159.32.
One of the day’s strongest performers, however, was miner Lynas Rare Earths, which soared by 4.24 per cent, followed by American gold miner Newmont Corporation, which lifted by 1.95 per cent.
The laggards
It wasn’t all good news for miners, though. Rio Tinto shares fell 2.72 per cent after it said iron ore shipments from the Pilbara would be at the lower end of its guidance as a result of extreme weather in the first quarter.
West Australian mining and metals company South32 was the hardest hit large company of the day, falling by 4.30 per cent, alongside Ampol, which took a 3.05 per cent hit, and Yancoal, which fell by 2.66 per cent.
Toilet and plumbing manufacturer Reece also took a hit, dropping 3.54 per cent over the day.
The lowdown
One of the most notable stocks on the Australian market was Star Entertainment, which ended the day flat at 11¢ after the struggling casino operator traded for the first time since late February because the company was unable to file its accounts.
Adam Dawes, senior investment adviser at Shaw and Partners, described the shares’ stability as “quite a good result” after a turbulent few years.
“To end flat is an amazing feat for them ... there’s been a lot of brokers that have cut their price targets, but to end flat, I think that was quite good.”
Dawes also said growth in defensive sectors like consumer staples — Woolworths (up 1.1 per cent) and Coles (up 1.05 per cent) — was understandable considering the volatility in global markets, pointing also to the growth in gold as a defensive investment.
At embattled software company WiseTech Global, founder Richard White entered into an employment agreement with the company under the title executive chair and chief innovation officer, inking a 10-year, $1 million-a-year contract. The company’s stocks fell by 1.21 per cent on Wednesday to $83.83.
Bank of Queensland shares rose 4.92 per cent after the regional bank said its profit margins would widen in the second half because of its move to convert owner-manager branches to corporate-owned outlets.
BOQ announced last year that it would bring all owner-managed branches into its corporate structure – a move that has brought it into conflict with dozens of former branch owners.
In its half-year results on Wednesday, BOQ said it had completed the conversion process and this would add 12 basis points to its net interest margin – a key gauge of profitability.
Today’s falls were foreshadowed by a tumultuous US market defined by the ever-evolving trade wars brought on by Donald Trump’s “Liberation Day” tariffs. Trump called on China to reach out to him to kick off negotiations, indicating there was no end in sight to the fight that has seen both sides raise trade barriers. China ordered airlines not to take further deliveries of Boeing jets, according to people familiar with the matter. Meanwhile, the European Union and the US made scant progress bridging trade differences.
“We would advise investors to avoid making hard and fast assumptions about how tariff developments will ultimately play out in the economy and on corporate profits,” said Anthony Saglimbene at financial services firm Ameriprise.
“Instead, we suggest investors prepare for a range of possible intermediate-term outcomes that include slow-to-positive economic and profit growth, and scenarios of slow-to-negative growth.”
High uncertainty surrounding US trade policy and a spike in financial market volatility has unsettled global investors over the past few weeks. Sentiment regarding economic prospects is the most negative in three decades, yet fund managers’ pessimism isn’t fully reflected in their asset allocation, which could mean more losses for US stocks, a Bank of America survey shows.
Fund managers are “max bearish on macro, not quite max bearish on the market,” strategists led by Michael Hartnett wrote in a note. “Peak fear” is not yet reflected in cash allocations, they added.
The S&P 500 fell 0.17 per cent, the Nasdaq 100 was down 0.05 per cent and the Dow Jones Industrial Average fell 0.38 per cent. Bitcoin fell 1 per cent to $US83,970.85 and Ether was down 1.6 per cent to $US1608.22.
Quote of the day
“It took many months for COVID-19 to mutate into different strains, while Trump’s zigzags and somersaults on tariffs policy have hit with such speed that it has paralysed large businesses, rendering them unable to make investment decisions.”
That’s Elizabeth Knight on the similarities between our last global pandemic and the US administration’s tariff agenda, which you can read here.
With Bloomberg
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