ASX drops as lower oil price hits energy stocks

Welcome to your five-minute recap of the trading day.

The numbers

The Australian sharemarket closed lower on Thursday as energy stocks slumped, extending its falls into a third day despite a late rally on Wall Street amid hopes for easing trade tensions.

The S&P/ASX 200 fell 46.4 points, or 0.6 per cent, at 8094.7, having slightly rebounded after having hit an intraday low of 8076.80 points during the session. Eight of the market’s 11 industry sectors declined, led by energy and utilities stocks. The Australian dollar was flat at 63.45 US cents.

The losses come after the local bourse shed 0.7 per cent on Wednesday amid worries an escalating trade war will hurt global growth and company earnings.

The lifters

Materials were one of four sectors that closed in the green. Fortescue rose 1.1 per cent, while gold miner Newmont gained 1.4 per cent as investors fled to safe haven assets such as gold. BHP lost 0.8 per cent after it traded ex-dividend, while Rio slid 2.2 per cent.

It’s been a rollercoaster on the New York Stock Exchange since Trump’s new tariffs against Canada, Mexico and China kicked in.Credit: Bloomberg

Some respite also came from tech stocks – embattled logistics software giant WiseTech Global led the gains, rising 0.6 per cent, while data centre operator NextDC lifted 1.4 per cent.

A late day rally saw REA Group rise 4.3 per cent and Seek lift 0.4 per cent, edging the communication services sector into the green at close.

The laggards

Energy stocks led the falls, dragging the sharemarket into the red after concerns around Trump’s tariffs sent oil prices tumbling to three-year lows overnight, weighing on the outlook for commodities demand. Oil and gas giant Woodside plunged 4.7 per cent, weighed down further by the fact that its shares traded for the first time without the right to its latest dividend. Santos and refiner Ampol extended their losses, shedding 1.9 per cent and 1.8 per cent respectively.

Banking and financial stocks were down yet again, amid ongoing concerns about the damage Cyclone Alfred will inflict on insurers’ financials. QBE lost 1.3 per cent, Suncorp shed 1 per cent and IAG dropped 0.4 per cent. The big four banks were mixed. CBA, the nation’s biggest lender (down 1.8 per cent) and Westpac (down 0.9 per cent) extended their losses, while a late day rally saw NAB (up 0.1 per cent), and ANZ (up 0.1 per cent) edge into the green.

Healthcare stocks also weighed on the index, dragged by biotech giant CSL (down 0.9 per cent) and sleep apnoea treatments maker ResMed (down 3.4 per cent).

Qantas’ share price shed 2 per cent. It comes after the airline announced on Wednesday multiple flight cancellations and disruptions over potential safety concerns arising from Cyclone Alfred.

Consumer staples shares made gains in early trade, buoyed by A2 Milk (up 1.1 per cent) and bottle shop owner Endeavour Group (up 1.7 per cent). However the sector slid back into the red at the close, dragged by supermarket giant Woolworths shedding 0.8 per cent. Penfolds maker Treasury Wine Estates rose 0.9 per cent.

The lowdown

Less than 48 hours after slapping tariffs on all goods from Canada and Mexico, US President Donald Trump agreed to a one-month reprieve for imports from America’s neighbours to US carmakers. The move rekindled hopes on Wall Street for more moderate actions from the US government, however the optimism didn’t spill over into the Australian market.

eToro analyst Josh Gilbert said that the local market continued to look uncertain against a backdrop of global trade uncertainty, with the escalating tariff war weighing particularly heavily on oil prices and, as a result, energy stocks.

“It has been a pretty poor day overall, with a lot of it driven by energy stocks. Oil is trading at three-year lows, which is putting a drag on Australian energy stocks,” he said.

“The current volatility highlights the need for diversification, but I do think that volatility might increase further.”

The declines on the local exchange come after Wall Street’s main indexes rose in choppy trading overnight, as investors hoped for a delay in US auto tariffs on its top trading partners. The tepid gains turned into a rally after a one-month exemption was confirmed late in the session, sending the S&P500 up 1.1 per cent. The Dow Industrial Average also climbed 1.1 per cent, and the Nasdaq Composite jumped 1.5 per cent.

“We are on the tariff rollercoaster,” said Wasif Latif, chief investment officer at Sarmaya Partners in New Jersey. “The economic data, the Fed, and all that stuff seems to have been pushed to the background for now. It’s just a reminder how these policies have an impact in the long run, and the markets are reacting to it.”

Trump is giving a one-month exemption on his stiff new tariffs on imports from Mexico and Canada for US automakers, amid fears that the trade war could harm US manufacturers.

Most traded shares on IG Markets, March 2025.Credit: IG Markets.

The announcement came after Trump spoke with leaders of the “Big 3” automakers, Ford, General Motors and Stellantis. Trump also said he told the car bosses they should move production to the US from Canada and Mexico, said White House press secretary Karoline Leavitt.

The carmakers’ shares advanced, with Ford trading 5.8 per cent stronger, General Motors jumping 7.2 per cent, Stellantis up 9.2 per cent and Elon Musk’s Tesla rising 2.6 per cent.

Trump escalated a global trade war on Tuesday as he imposed 25 per cent tariffs on top trade partners, Canada and Mexico, and increased levies on China. The taxes almost immediately triggered retaliatory measures by Canada and China, with Mexico planning to announce its response on Sunday. The US stock market has given up all of its gains since Trump’s victory in last year’s presidential election and consumers are exhausted by inflation and worried the costs of the tariffs will lead to higher prices.

Reuters, with staff writers

The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.