ASX slips, miners fall on Trump’s copper call; Flight Centre tumbles

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

The numbers

The benchmark S&P/ASX 200 index on Thursday dropped 13.6 points, or 0.2 per cent, to 8742.8, while the broader All Ordinaries dipped 16.4 points, or 0.2 per cent, to 8999. Nine of the 11 sectors finished in positive territory, with the index dragged down by materials and energy.

The Australian dollar had dipped back under US65¢ for the first time in a fortnight, trading for US64.70¢, from US65.12¢ at 5pm on Wednesday.

Wall Street remains in the green after the Fed held fire on interest rates. Credit: AP

The laggards

US copper prices fell more than 20 per cent after the White House announced that tariffs of 50 per cent would apply to imports of semi-finished copper products from August 1 but not to imports of refined metal. Traders had anticipated the tariff would be applied to all refined metal imports. The news, along with a drop in iron ore prices, weighed on mining heavyweights. BHP lost 2.4 per cent and Fortescue Metals slid 2.3 per cent, while Rio Tinto, which released weaker-than-expected earnings after trading closed on Wednesday, shed 3.6 per cent. Champion Iron was the biggest loser, down 13.1 per cent.

Non-copper miners were also deep in the red, with goldminer Evolution falling 3 per cent, lithium miner Pilbara retreating 7 per cent and Nickel Industries dropping 2.6 per cent.

In the consumer discretionary sector, travel group Flight Centre sank 7.3 per cent after revealing it would miss the bottom end of its guidance as it grapples with a number of challenges, including rising costs in Asia, the impact of tensions in the Middle East and a downturn in bookings to the US.

Luxury online retailer Cettire tumbled 23.5 per cent after Trump ordered the end of a policy that has allowed billions of dollars of low-value imports to enter the United States without paying tariffs.

Cettire shares tumbled on Thursday. Credit: Dominic Lorrimer

The lifters

The big banks edged higher, with NAB advancing 1.1 per cent, Commonwealth Bank rising 0.5 per cent while ANZ inched up 0.1 per cent. Westpac, which was unveiled as the new major sponsor of Australia’s cricket teams, added 0.3 per cent.

The consumer discretionary sector lifted overall after retail sales for June came in three times higher than expected. Wesfarmers was up 1.2 per cent, JB Hi-Fi rose 1.3 per cent and Harvey Norman finished 1.1 per cent higher.

Tech stocks also gained, with Life360 one of strongest, up 3.2 per cent. WiseTech added 1 per cent, Xero was up 0.6 per cent and TechnologyOne rose 1.9 per cent.

The lowdown

Investors are navigating a barrage of headlines from trade tensions and central bank decisions to a wave of corporate earnings.

The Australian sharemarket clawed back some early losses but finished the session lower, with miners weighing on the index after US President Donald Trump shocked traders by exempting the most widely imported form of copper from his planned tariffs while the Federal Reserve kept rates on hold.

Trump unleashed a series of tariff deals and demands on the eve of his Friday deadline, including surprises on India and copper as the US president attempts to create a new global trade order.

The onslaught comes on the eve of an August1 deadline, when the White House threatened reciprocal levies for countries without bilateral agreements, which most don’t have.

“Today we got a flurry of details and it’s the case of the old saying: ‘you can’t see the forest for the trees’,” said Rob Subbaraman, chief economist at Nomura Holdings. “Stepping back, Trump has by and large followed through on his tariff threats. Right now it’s just a lot of noise.”

Most countries are still without a trade deal, and key details are scant for those who have one — including potential exemptions, investment promises and potential changes to rules of origin. The uncertainty and confusion amid the long rollout of Trump’s new trade order has already hit global economic growth and weighed on investment, even as markets remain optimistic.

“These deals ramming against the clock — it’s really not a good sign,” said Alicia Garcia Herrero, chief economist for Asia Pacific at Natixis. The reach pushes countries to an agreement to avoid potentially higher levies, but could end up costing their economies more, she said.

The tariff news overshadowed a number of other items affecting Australian traders’ sentiment, including better-than-expected domestic retail sales for June and solid earnings from tech giants Meta and Microsoft, which surged in after-hours trading after posting robust results.

Australian retail sales came in stronger than forecast in the final reading of the series, running counter to recent data that has supported the Reserve Bank cutting interest rates as early as next month.

Sales jumped 1.2 per cent in June from the prior month, when they climbed an upwardly revised 0.5 per cent, and against a forecast 0.4 per cent gain, according to data from the Australian Bureau of Statistics on Thursday. This will be the last retail sales report as the ABS focuses on its household spending indicator that provides broader coverage of consumption.

Retail sales have traditionally been an important consideration for monetary policy as consumption accounts for more than half of gross domestic product. But the ABS, in a statement this week, pointed to the steady decline in importance of the current report.

The Reserve Bank has repeatedly highlighted the outlook for household spending as a key uncertainty in its making of monetary policy.

“Available indicators for the June quarter suggested that growth in household consumption had been slightly below the staff’s expectations,” the bank said in minutes of its July 7-8 board meeting.

Money markets are all but certain the Reserve Bank will cut at its August 11-12 meeting in what would be its third easing of the year. The central bank confounded traders and economists this month by standing pat against a heavy expectation for a cut. Governor Michele Bullock signalled that the board wanted to wait to see quarterly inflation data, which came out this week and showed price pressures abating.

Meanwhile, the Federal Reserve move to hold rates steady may upset Trump, who has been angrily lobbying for lower interest rates, but it was widely expected on Wall Street.

What may have surprised investors more was Fed chair Jerome Powell’s pushing back on expectations that the Fed could cut rates at its next meeting in September. Besides Trump, two members of the Fed’s committee have also been calling for lower rates to ease the pressure on the economy, and they dissented in Wednesday’s vote.

But Powell would not commit to a September cut in rates, pointing to how inflation remains above the Fed’s 2 per cent target, while the job market still looks to be “in balance.”

He also said that the Fed would receive two months’ worth of data on inflation, the job market and other economic indicators before it meets again to vote on rates in September. That could give the Fed more confidence that the risk of high inflation is no longer bigger than the risk of a weak job market, a combination that would prod officials toward lowering rates.

Powell’s comments drove traders to pare back bets on a cut in September. They see just a 45 per cent chance of that, down from a nearly 65 per cent probability a day earlier, according to data from CME Group.

With AAP, AP, Bloomberg, Reuters

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