Gold miners jump on trade war uncertainty but ASX ends lower

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

The numbers

The Australian sharemarket seesawed between green and red throughout trade on Monday to end slightly lower in a session dominated by investors trying to get their heads around the latest salvo from Donald Trump on his trade wars agenda.

After falling away at the start, the S&P ASX 200 Index rose briefly in the afternoon to only end in the red at 8570.40, a dip of 9.73 points or 0.1 per cent. Only four of the underlying sectors were higher, with seven of the bourse’s 11 sectors in negative territory. Energy was the strongest, rallying by 0.65 per cent and Industrials the weakest, losing 0.53 per cent.

Wall Street lost ground on Friday.Credit: Bloomberg

The Australian dollar was buying US65.58¢, from US65.72¢ at the close of business on Friday. Bitcoin had set another all-time high, at $US122,500, or more than $186,000 on Australian exchanges. The original cryptocurrency is up 3.7 per cent in the past 24 hours and has roughly doubled in value over the past 12 months.

The lifters

Mining stocks ended the day stronger. BHP was up 0.94 per cent and Rio Tinto climbed 0.58 per cent, but Fortescue slid 0.47 per cent. Gold miners rose as Trump’s trade war angst boosted the price of the safe haven commodity. Northern Star added 1.72 per cent, Evolution Mining jumped 1.88 per cent and Newmont was up 1.66 per cent by day’s end.

The US president on Saturday (US time) gave trade ultimatums to Mexican President Claudia Sheinbaum and European Commission President Ursula von der Leyen, the latest in a string of letters he’s sent since last week to economies including Canada and Brazil that set out new duty rates.

Rising trade tensions have underscored gold’s haven appeal, although investors have grown increasingly less convinced about the likelihood of widespread upheaval after Trump previously backed down from some aggressive tariff threats.

Energy stocks also found favour rising on the back of strengthening oil prices. Santos added 0.52 per cent, Woodside rose 0.42 per cent and Ampol added 0.62 per cent.

The laggards

The big banks were mixed. NAB edged 0.13 per cent higher, market behemoth Commonwealth Bank lost 0.39 per cent, Westpac fell 0.74 per cent and ANZ shed 0.82 per cent in morning trade.

The industrials sector struggled. Qantas, embroiled in a hack targeting data from 5.1 million frequent flyer customers, ended slightly lower, down 0.92 per cent. Pallet maker and logistics specialist Brambles closed 0.38 per cent lower, while plumping supplier Reece fell 2 per cent.

Tech stocks also suffered with Wisetech slumping 1.3 per cent and Xero down 0.72 per cent.

The lowdown

In reaction to the increased trade uncertainty, Australia is positioning itself as an open market for Southeast Asian allies looking to diversify their trade as nations in the region are slapped with US tariffs.

Foreign Minister Penny Wong pledged Australia would remain a reliable partner to Southeast Asian nations and Canberra would continue to deepen economic ties in the region as she distanced Australia from a US protectionist approach.

“We know more trade with South-East Asia means more jobs, more investment and a stronger, more resilient Australian economy,” she told reporters in Kuala Lumpur on Friday.

On Friday, Wall Street slid lower to wrap up a losing week. The benchmark S&P shed 0.3 per cent, Dow Jones dropped 0.6 per cent, and the Nasdaq composite gave up 0.2 per cent after drifting between small gains and losses much of the day.

The US selling capped an uneven week in the market as Wall Street kept an eye on the Trump administration’s rollout of new tariff threats and looked ahead to the upcoming corporate earnings reporting season.

The administration had initially set Wednesday as a deadline for countries to make deals with the US or face heavy increases in tariffs. But with just two trade deals announced since April, one with the United Kingdom and one with Vietnam, the window for negotiations has been extended to August 1.

The initial rollout of Trump’s tariff policies earlier this year roiled financial markets. But Wall Street has been relatively stable in recent weeks, with stocks steadily rising to record levels. That suggests the market has mostly adjusted to the unpredictability of Trump’s rapidly shifting tariffs. Some market watchers, however, aren’t so sure.

The market’s response to Trump’s tariff escalation this week “has been surprisingly muted. Markets appear to believe that Trump will again back down,” Paul Ashworth, chief North America economist at Capital Economics, wrote Friday. “We are not so sure.”

Despite the uncertainty around tariffs, Wall Street has already come to accept a “base case” of 10 per cent tariffs across the board, said Eric Teal, chief investment officer at Comerica Wealth Management.

With AAP, AP, Reuters

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