ASX retreats as Trump pushes steel tariffs; Star jumps

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

The numbers

The Australian sharemarket sank on Monday as miners retreated after President Donald Trump announced the United States will impose 25 per cent tariffs on all steel and aluminium imports.

The S&P/ASX 200 closed 28.6 points, or 0.3 per cent lower, to 8482.8 points, as tech and telco stocks dragged the bourse lower. Gains in consumer staples, utilities and healthcare stocks helped mitigate the losses.

The ASX is in negative territory on Monday.Credit: Louise Kennerley

The lifters

Star Entertainment Group is at the top of the bourse, storming 13.6 per cent higher after it confirmed that it is in talks with its Chinese partners to sell its Queen’s Wharf casino precinct provided it gets the best price. Ansell is up 8.1 per cent after announcing stronger than expected growth. Gambling products company Light & Wonder is up 7.9 per cent.

The laggards

Car Group is at the bottom of the index, shedding 6.5 per cent. Despite revealing a 12 per cent lift in pro forma revenue and pro forma earnings, it missed analyst expectations. JB Hi-Fi jumped initially, but finished 4.6 per cent lower as investors digested its half-year results – a 10 per cent rise in group sales were overshadowed by declining gross margins and increases in the cost of doing business.

WiseTech is down 4.4 per cent as shareholders digested news from this masthead that billionaire founder Richard White is facing three new allegations of inappropriate conduct made since the board cleared him of bullying, harassment and intimidation three months ago.

Rio Tinto (down 1.2 per cent), BHP (down 1 per cent) and Fortescue (1.5 per cent) deepened their losses at the end of Monday’s trading session. BlueScope Steel, which is heavily invested in the US, finished 1.8 per cent higher.

Most traded shares on IG Markets.

The lowdown

“We see this upcoming period as a potential trough for earnings,” Morgan Stanley’s equity strategy team said in a note to investors.

“We expect consumer confidence will have increased in February, and whilst still weak, will be around its highest levels since the RBA started hiking rates in May 2022. We expect measures of future expectations to improve as consumers anticipate earlier RBA rate cut easing.”

Macquarie Bank’s strategy team urged investors to examine their shorted stocks, pointing to Domino’s and Nick Scali last week as two examples of highly shorted stocks that performed better than expected. “The fact that both are consumer stocks, where expectations have been lowered after months of disappointments, is also notable,” they said.

“The potential for RBA rate cuts to start in February plus more China stimulus are two possible catalysts for earnings upgrades in 2025. The negative impacts of tariffs and US government spending cuts are potential headwinds to earnings growth,” they added.

Trump’s announcement that the US will impose a 25 per cent tariff on steel and aluminium imports is a major litmus test for the federal government and where it stands with the new US administration, said BetaShares chief economist David Bassanese.

“[The tariffs are] not in the interest of global free trade as it unfairly hurts all steel and aluminium exporting countries irrespective of whether they engage in free trade or not. It is also not in the interest of the United States at a time when the economy is already close to fully employed, retains uncomfortable high inflation, and has an overvalued share market,” Bassanese said in a note.

“If that forced the US Federal Reserve to raise interest rates this year, the resulting increase in bond yields could cause a sharp correction in share market valuations. In short, the boost to economic growth and inflation caused by higher tariff protection is simply not needed by the US economy at this time,” he said.

On Friday, the S&P 500 fell 0.9 per cent and erased what had been a modest gain for the week. It’s one of the worst drops for the index so far in the young year, but it remains near its record set two weeks ago. The Dow Jones sank 444 points, or 1 per cent, and a sharp fall for Amazon after its latest profit report dragged the Nasdaq composite to a market-leading loss of 1.4 per cent.

Tweet of the day

Quote of the day

“This [joint venture on the board] creates a culture of proprietorship of the organisation by the sponsor members, and that proprietorship culture permeates through to impact in varying ways on those dealing with the organisation and in particular its employees.”

That’s former competition tsar Graeme Samuel who led a decade-old secret review of a governance scandal at industry superannuation giant Cbus, which recommended appointing more independent directors to its board to curb the powerful influence of the CFMEU and improve the fund’s culture.

You may have missed

Star Entertainment Group has confirmed that it is in talks with its Chinese partners to sell its Queen’s Wharf casino precinct, provided it gets the best price.

The casino operator’s shares jumped as much as 22 per cent on Monday, to a high of 13.5¢, after it said it has already rejected several confidential, indicative and non-binding proposals from its partners – Chow Tai Fook Enterprises Limited (CTFE) and Far East Consortium International Limited (FEC). They want to acquire Star Entertainment’s 50 per cent stake in Queen’s Wharf.

With AP

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