ASX runs out of puff ahead of budget night as banks, miners wilt

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

The numbers

The Australian sharemarket gave up most of its early gains on Tuesday afternoon, to close almost flat ahead of federal budget night, despite a surge on Wall Street on the back of hopes that Donald Trump will be more selective with his tariffs.

The S&P/ASX200 finished up 5.60 points, or less than 0.1 per cent, at 7942.50, with eight of 11 industry sectors in positive territory. Technology shares were the best performers, while banks dipped into the red in afternoon trade.

Federal Treasurer Jim Chalmers will deliver the budget at 7.30pm AEDT. The Australian dollar was up 0.1 per cent at 62.89 US cents as of 5pm AEDT.

Wall Street bounced higher to kick off its week, but it wasn’t enough to spark a rally on the ASX.Credit: Reuters

The laggards

The session had kicked off strongly, with all the big four banks up initially, but they reversed their early gains as the day went on. The Commonwealth Bank was still up 0.7 per cent by the close. However, NAB fell 0.5 per cent, Westpac shed 0.6 per cent and ANZ closed 3.2 per cent lower when the session finished.

The market was also held back by the mining heavyweights and consumer staple sectors, which lost 0.6 per cent and 0.8 per cent, respectively. BHP fell 0.7 per cent, Fortescue Metals dropped 1.3 per cent and Rio Tinto slipped 0.3 per cent. Supermarket giant Woolworths fell 1.8 per cent, while bottle shop and hotels operator Endeavour fell 2.5 per cent.

Building materials giant James Hardie slumped 5 per cent, having shed 14.5 per cent in the previous session after it agreed to a $14 billion blockbuster deal to combine with AZEK, a US maker of outdoor living products. James Hardie will pay a “heavy premium”, Morgan Stanley analysts said, and predicted that the market would “be sceptical of revenue synergy targets” from the merger.

The lifters

Financial stocks and materials such as the miners and James Hardie make up more than half of the local sharemarket, so a 1.9 per cent tech stock rally - powered by a 3.8 per cent jump in WiseTech, a 5.3 per cent surge in family member location app Life360 and a 1.3 per cent gain for software maker Xero - wasn’t enough to power the market higher.

The local tech stocks were following their peers in the US, where Tesla managed to have its best day this year so far with a rise of almost 12 per cent.

Healthcare stocks were also advancing, with biotech giant CSL up 1.4 per cent, Sigma Healthcare gaining 2.1 per cent and ResMed up 1.5 per cent.

Shares in Slater & Gordon rose 1.6 per cent after the law firm said it has referred a former employee to Victoria Police after its internal investigation concluded they may have been behind a “series of identical malicious emails” sent to more than 900 current and former staff members.

The lowdown

Overnight on Wall Street, stocks had broad gains amid hopes that the Trump administration may take a more targeted approach as it tees up a new round of tariffs on imported goods next week.

The S&P 500 jumped 1.8 per cent. The index was coming off its first winning week after a four-week losing streak. The Dow Jones rose 1.4 per cent, and the Nasdaq composite closed 2.3 per cent higher.

However, the sugar hit didn’t last long on Asian markets and the ASX.

“Investors remain cautious about the forthcoming tariff policies,” said Graham Chin, investment strategist at EBSI Private. “The lack of detailed information contributes to ongoing uncertainty, leaving many investors on the sidelines.”

And despite the overnight gains, the benchmark S&P 500 is still down 1.9 per cent so far this year out of concerns that a trade war could hinder economic growth and increase inflationary pressures.

Wall Street remains focused on how tariffs could eventually impact inflation, consumer spending and economic growth. Stocks have been riding waves of hope and worry as tariffs are announced, then either implemented or pulled. A new round of tariffs scheduled to be implemented on April 2 could also be softened or postponed rather than take effect.

Trump has been somewhat closely guarded about his new plans for tariffs, saying on Monday that even though he wants to charge “reciprocal” rates — import taxes to match the rates charged by other countries -- that “we might be even nicer than that.”

“The exact breadth and scale of the tariffs remain to be seen, and a cycle of tit-for-tat escalation is also possible in the weeks following the announcement, potentially triggering further bouts of market volatility,” said Ulrike Hoffmann-Burchardi, chief investment officer of global equities at UBS Global Wealth Management.

Wall Street’s gains on Monday were broad, but technology stocks led the way. The sector has been the driving force behind much of the broader markets movement, whether up or down. The stocks are among the most valuable on Wall Street and tend to have an outsized impact on the broader market’s direction. Nvidia rose 3.2 per cent and Apple added 1.1 per cent.

Tesla climbed 11.9 per cent for the biggest gain among S&P 500 stocks. The electric vehicle maker is still down about 31 per cent for the year. It has been struggling on worries that customers are turned off by CEO Elon Musk’s leading efforts to slash spending by the US government.

Genetics testing company 23andme lost more than half its value after it announced over the weekend that it had initiated voluntary bankruptcy proceedings.

AZEK jumped 17.3 per cent after the building materials company announced it was being bought by James Hardies in a cash-and-stock deal valued around $US8.75 billion ($14 billion).

Wall Street has several economic updates this week. On Friday, the US government releases the personal consumption expenditures price index for February, a measure of inflation closely watched by the Federal Reserve.

with AP

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