ASX closes flat as Wall Street winning streak ends

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

The numbers

Drops in healthcare and consumer staple stocks brought the Australian sharemarket slightly down on Tuesday, though the bourse remained relatively flat, outperforming expectations after a sluggish day on Wall Street overnight.

Wall Street’s winning streak came to an end.Credit: Bloomberg

The S&P/ASX 200 closed 6.4 points, or 0.1 per cent, down this afternoon, reaching 8151.4, with seven of the 11 sectors rising, although less than 1 per cent. The Australian dollar was trading at US64.51¢ after closing.

The lifters

Data centre operator NEXTDC was the day’s best performing stock, up 8.3 per cent, far outperforming the information technology sector, which lifted 0.3 per cent. Evolution Mining was up 5 per cent, followed by miners Yancoal and Northern Star Resources, which were up just under 4 per cent, with the trio bolstering a 0.6 per cent bump in the materials sector and a 0.8 per cent lift in energy.

Ampol was up 3.5 per cent, followed by modest gains at Woodside (up 0.4 per cent) and Santos (up 0.7 per cent). BHP ended the day down 0.4 per cent, with a similar fate at Rio Tinto (down 0.3 per cent). American gold miner Newmont Corporation was up 2.3 per cent as gold prices rose overnight.

The laggards

The hardest-hit firm of the day was Sigma Healthcare, which fell by 6.7 per cent, leading a downward charge in the healthcare sector, which fell 1.9 per cent through the day. Biotech firm CSL lost 2.5 per cent, while Telix Pharmaceuticals dropped by 3.8 per cent.

Also falling, less dramatically, were the consumer staple and financial sectors, down 0.5 and 0.4 per cent respectively. Most of the pain in consumer staples was felt at liquor and pubs giant Endeavour Group, which fell 4.3 per cent, amid investor pressure. A2 Milk took a hit of 4 per cent, while Woolworths dropped by 0.2 per cent.

The lowdown

Australia’s $240 billion sovereign wealth fund predicts geopolitical tensions will drive up global inflation and bond yields for an “extended period”, as it seeks to navigate what it believes will be a more volatile and difficult environment for investors.

The Future Fund on Tuesday said it had ridden out the volatility that rocked global markets during the March quarter, during which sharemarkets were spooked by US President Donald Trump’s plan to radically overhaul global trade.

“We are seeing consequential changes in geopolitical, economic and market environments at the moment and that is causing volatility and uncertainty for investors,” CEO Raphael Arndt said.

“Our expectation is that these conditions will lead to higher inflation and bond yields for an extended period. These are the conditions for which the portfolio has been built over the past five years, and it has behaved to our expectations in recent months.”

Following Labor’s landslide federal election win, expectations of an interest rate cut at this month’s Reserve Bank meeting have remained steady, though a broader package of cuts expected for the year may be softened should a “deal” on tariffs be struck with the Trump administration.

The UBS Australian economics team said: “The election does not materially change our outlook, since the incumbent government won. Hence, we still think the RBA will likely cut rates by 25 basis points at its May 20 meeting. We also still expect a cumulative 100 basis points of rate cuts in 2025.

“The risk to our RBA view remains to the upside [ie, fewer cuts]. If the US ‘pause’ on tariffs were to become a ‘deal’, we think the RBA would probably cut less, and ‘skip’ a cut in July 2025.”

The expectation of further cuts was echoed by AMP chief economist Shane Oliver who said cuts should be expected this month, but that Labor’s spending commitments meant “that interest rates will likely be higher than might otherwise have been the case”.

The Australian sharemarket’s “quiet session follows a subdued and low-volume day on Wall Street, where the market’s winning streak ended as ongoing trade tensions overshadowed strong economic data ahead of the Federal Reserve’s interest rate meeting on Thursday morning”, IG Markets analyst Tony Sycamore said.

Crude oil prices fell 1.8 per cent to $US57.22 a barrel. Many producers can no longer turn a profit once oil falls below $US60. Prices are down sharply for the year over worries about an economic slowdown. Energy companies fell. Exxon Mobil lost 2.5 per cent.

Overnight, the S&P 500 slid 0.6 per cent. The Dow Jones fell 0.2 per cent. Drops in big tech stocks such as Apple helped pull the Nasdaq composite down 0.7 per cent. The ASX lost 1 per cent on Monday.

There were slightly more gainers than losers within the S&P 500 index, but the market was weighed down by losses in technology stocks and other big companies. Apple slumped 3.2 per cent, Amazon 1.9 per cent and Tesla 2.4 per cent.

Markets are coming off another winning week as they absorb the shock of tariffs and a growing trade war, Trump’s tariffs on a wide range of imports having sparked global retaliation. Many of the more severe tariffs that were supposed to go into effect in April were delayed by three months, with the notable exception of tariffs against China.

The delays have provided some relief to Wall Street, though uncertainty about the impact from current and future tariffs continues to hang over markets and the economy.

“Uncertainty remains elevated and economic data will likely weaken in the coming months, meaning further bouts of volatility are likely,” said Ulrike Hoffmann-Burchardi, chief investment officer of global equities at UBS Global Wealth Management.

That uncertainty will overshadow the US Federal Reserve’s meeting this week.

Tweet of the day

Quote of the day

Trump has declared on social media that “The Movie Industry in America is DYING a very fast death”, but there were no signs Hollywood was looking for Dr Trump to apply his 100 per cent tariff defibrillator.

That’s columnist Elizabeth Knight on President Donald Trump’s announcement of 100 per cent tariffs on movies produced outside the United States, opening a new frontier – services – in his trade war.

With Clancy Yeates, AP, Bloomberg

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