ASX caps off volatile week in the red; Domino’s jumps on store closures

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

The numbers

Energy stocks dragged the Australian sharemarket into the red on Friday, capping off a week of worldwide turbulence caused by fears of a global trade war as US President Donald Trump’s strategy on tariffs came into play.

The Australian sharemarket opened lower on Friday before being lifted into the green by communication, IT and consumer stocks at lunchtime, however the benchmark index ultimately closed 9.3 points lower, or 0.1 per cent, to 8,511.4 points.

Wall Street has had a mixed session on Thursday.Credit: Bloomberg

The lifters

Domino’s investors celebrated the pizza chain’s announcement of 205 store closures, most of which are in Japan. It is the first major move by newly installed chief executive Mark van Dyck, who has declared a focus on disciplined growth and “decisive action”. The pizza business held its place at the top of the bourse all day with gains of 21.3 per cent.

KFC and Taco Bell operator Collins Foods also closed 12.7 per cent higher after US multinational brand owner Yum! Brands released fourth quarter figures showing solid sales growth for KFC. Lynas Rare Earths jumped 6.1 per cent, while digital property portal REA Group finished 2.8 per cent higher after reporting a 26 per cent rise in half-year profits and a 20 per cent lift in group revenue.

The laggards

Meanwhile, Beach Energy closed at the other end of the index, dipping 5.2 per cent. Lithium miner Liontown Resources slid 4.4 per cent, as did Star Entertainment, and News Corporation declined 3.8 per cent, offsetting much of yesterday’s share price climb after reporting a 5 per cent revenue rise to $US2.24 billion ($3.6 billion).

The lowdown

“Despite everything going on, markets managed to rally this week,” said AMP deputy chief economist Diana Mousina. “The US S&P is up 0.7 per cent over the week, still close to a record high. The ASX200 is basically flat but outperformed the US in recent periods.”

She said there are three key things to keep in mind on how Trump’s tariffs could impact Australia, a topic that dominated the week. Firstly, Australia has little direct trade with the US (just 0.5 per cent of US imports are from Australia); the main indirect impact is through lower commodity sales to China, our main trading partner; and the financial market aftershocks, which are reverberating through the lower Aussie dollar and equity market volatility.

“Our view is that global economy growth is still holding up well, inflation has further to fall (despite some short-term upside from tariffs) and interest rates will be cut further which provides a positive backdrop for sharemarkets, although returns will be lower compared to 2024 and a decent draw-down is likely this year due to the fluid policy backdrop,” Mousina said.

Morningstar market strategist Lochlan Halloway said that Australia, which has run a trade deficit against the US for decades, didn’t appear likely to be tariff target for Trump.

“But it doesn’t mean we’re completely out of the woods. We estimate ASX 200 companies generate at least 18 per cent of revenue in North America. Outside Australia and New Zealand, this is our largest market,” Halloway said.

“Consumer cyclical, industrials, and healthcare companies, many whom import goods into the US, may be at risk. We’ve already seen a profit warning from Fisher & Paykel Healthcare, which manufactures respiratory devices in Mexico.

“At the other end of the spectrum, utilities, financial services, and consumer defensive generate most of their sales in Australia and generally have limited direct exposure tariffs.”

Trump’s tariffs, if passed, would see a price impact “almost fully passed” to home country consumers in Mexico, the Canada and the US, according to the S&P Global Ratings economic team.

“The potential effects of the tariffs are overwhelmingly negative, including slower GDP growth, higher unemployment and inflation, and a stronger US dollar. The effects on the US are smaller than for trading partners,” the team said in a note.

“Uncertainty around the path of US policy and its objectives is high, and confidence bands around our forecasts are correspondingly wide. Moreover, the ongoing deal-making mode of the new administration risks complicating long-term decision-making by both firms and households.”

On Thursday, the S&P 500 rose 0.4 per cent following healthy gains for stock markets across much of Europe and Asia. The Dow Jones dipped 125 points, or 0.3 per cent, and the Nasdaq composite gained 0.5 per cent.

Tapestry, the company behind the Coach and Kate Spade brands, helped lead the market and jumped 12 per cent. It reported stronger profit for the latest quarter than analysts expected after attracting new, younger customers. Tapestry also raised its forecast for revenue and profit growth this fiscal year.

Philip Morris International, which sells Marlboro cigarettes and smokeless tobacco products around the world, was one of the strongest forces pushing upward on the S&P 500 and rallied 10.9 per cent after reporting a better profit than expected. It also gave financial forecasts that topped expectations, and analysts pointed in particular to the strength of its Zyn nicotine pouches.

The decision by Domino’s Pizza’s newly installed chief boss Mark van Dyck to close numerous stores was welcomed by investors.Credit: Peter Wallis

They helped offset a 7.5 per cent drop for Ford Motor, which fell even though the automaker delivered a stronger profit and revenue for the latest quarter than analysts expected. Investors focused instead on Ford’s financial forecasts for 2025, which the company said incorporates “headwinds related to market factors”.

While discussing Ford Motor’s earnings and financial forecasts, CEO Jim Farley said his company can manage a “few weeks” of tariffs of 25 per cent on Canadian and Mexican imports. But if they’re protracted, they would have “a huge impact on our industry,” resulting in higher prices for customers, losses of US jobs and the elimination of billions of dollars of industry profits.

Tweet of the day

Quote of the day

“Musk’s influence on the brand is becoming increasingly polarising, pushing many buyers to look elsewhere.”

That’s Electrifying.com chief executive Ginny Buckley on a late January survey that showed 59 per cent of British owners of electric cars, and those intending to buy such a vehicle, would be deterred from buying a Tesla due to Elon Musk’s influence. Tesla’s sales are plummeting across Australia and Europe amid the billionaire’s increasing involvement in global politics and rising competition from China.

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Woodside, the largest Australian oil and gas producer, says it is too late to prevent a blowout in energy bills after years of drilling restrictions have left the south-eastern states without enough new gas to offset dwindling supplies from Victoria’s Bass Strait.

While Queensland and Western Australia are exporters of liquefied natural gas (LNG) overseas, officials have been sounding the alarm that homes and businesses in Victoria, NSW and South Australia are heading for a domestic gas shortage within three years or sooner unless drastic measures are taken.

With AP

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