Australian sharemarket closes flat after Wall Street’s sell-off

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

The numbers

The Australian sharemarket closed flat in a choppy session, as gold miners and banks helped the S&P/ASX 200 index recover from a bad start. The market slumped one per cent at the open before steadily levelling out through the session. The Australian dollar jumped to US64.22¢.

The ASX reopened on Tuesday after the Easter long weekend, but was down in the morning.Credit: Getty Images

The S&P/ASX 200 finished 0.03 per cent, or 2.4 points, lower at 7816.7, with falls in the information technology and energy sectors offset by gains in materials, financials and consumer staples.

Today was the first day of a shortened week of trade, with expectations of a relatively calm market. However, traders were on “Trump watch” as they digested the prospect of a global recession resulting from the US president’s erratic approach to economic policy.

The lifters

The biggest successes of the day were a mix of miners, banks and consumer goods. The Commonwealth Bank shares jumped 4.2 per cent to close at a record $168 apiece. Macquarie, which announced a $2.8 billion sale of its US and European assets to Japanese firm Nomura, rose 0.6 per cent, as the financials sector rose 1.23 per cent.

The materials sector, up by 0.19 per cent, was also a strong performer, largely on the back of buoyant gold miners as bullion hit a record high of $US3,500 an ounce.

Evolution Mining rose 4.85 per cent, while De Grey Mining (up 3.41 per cent), Northern Star Resources (up 2.95 per cent), and Newmont (up 0.61 per cent) all posted solid gains.

Gold prices surged as investors on a “buyer’s strike” of US equities sought a haven, Moomoo Australia market strategist Jessica Amir said.

“Investor sentiment is sour, evidenced in burgeoning cash balances and hoarding of gold,” she said. “That’s a good thing for those investors as gold continues to surge to highs.”

The big supermarkets also saw growth with Coles up 1.1 per cent and Woolworths up 0.7 per cent, helping to lift the consumer staples sector by 0.3 per cent for the day.

The laggards

There was more red on the board today than green, however, with all other sectors falling, led by information technology, which dropped 2.3 per cent for the day.

IT had the biggest decliner of the day: data centre operator NEXTDC, which dropped 6.18 per cent.

Other falls in the sector came from WiseTech (down 2.4 per cent), TechnologyOne (down 1.53 per cent), and Xero (down 1.3 per cent). Energy was also hit hard, dragged down by falls of 1.8 per cent at Woodside, and 1.7 per cent at Ampol.

Uranium miner Deep Yellow plunged 8.2 per cent after announcing it would delay development of its flagship Tumas project in Namibia due to depressed uranium prices.

“We have a situation where the long-term uranium market is essentially broken,” CEO John Borshoff said.

“This is due to more than a decade of sector inactivity, persistently depressed uranium prices, and utility offtake contracting practices which are yet to support the development of greenfields uranium production.”

The lowdown

Heavy selling lashed Wall Street anew on Monday, with longer-dated Treasuries joining stocks and the dollar in a deepening slump, after Donald Trump’s rejection of Jerome Powell’s policy on interest rates sowed angst among investors already coping with a global trade war.

IG markets analyst Tony Sycamore said even if Mr Trump halts his public criticism of Mr Powell, it is likely he has already done enough damage in recent weeks to ensure investors “continue to exit the greenback for calmer waters”.

“If Trump’s pursuit of Powell continues in the public arena, it will only hasten the exodus of offshore investors from US assets,” he said.

Trump’s assurances that tariff talks were progressing did little to stop the rout. The S&P 500 and other major US stock indexes tumbled about 3 per cent each in light trading, while a gauge of the US dollar weakened to a 15-month low. After a late recovery, the S&P 500 was down 2.4 per cent.

“I suspect, as we have been for the last month or two, we’ll be on Trump watch,” said Stephen Miller, an investment strategy consultant at GSFM. “We have seen some mitigation of the ‘Liberation Day’ announcements. But they’ve been just that – mitigation, not eradication.”

Companies and investors are grappling with an aggressive tariff landscape poised to keep shifting and fuelling worries about a recession as Trump’s administration negotiates with a range of countries. While he has paused some of the heftiest levies on imports, the US is also locked in an escalating trade battle with China, the world’s second-largest economy.

Johannes Faul, director of equity research at Morningstar, said that while Australian retailers would be “largely sheltered” from the tariff war between the US and China, there were still two risks on the horizon.

“First, a potential economic slowdown could taper consumer spending … Second, we anticipate disinflation in discretionary consumer goods from a glut of Chinese products. While good news for consumers, cyclical retailers could be confronted with less revenue growth and declining operating leverage,” said Faul.

The fallout from Trump’s reciprocal tariff announcements is expected to continue. Credit: Bloomberg

“If maintained, we estimate current US tariffs could shave about 1 percentage point from Australia’s gross domestic product, with about half attributable to lower household consumption. However, this assumes no monetary or fiscal support, which is unlikely.”

Purchasing Managers’ Index data for April will be released on Wednesday. These reports will provide a snapshot of the impact of reciprocal tariffs on manufacturing and services sectors.

AMP chief economist Shane Oliver said the May 3 election would continue to “bubble away in the background”.

“You could argue that the Coalition is probably going to spend a bit more in the short term … Labor a bit more in the longer term,” Oliver said. “But whoever wins, we’re certainly facing pretty big budget deficits.”

Tweet of the day

Quote of the day

‘It was perhaps one of the most surreal moments in Trump’s second term that he chose this moment to fight against low-flow shower heads’.

That’s columnist Elizabeth Knight speaking about the stranger events of recent days, in her breakdown of the hits American consumers are set to feel as the Trump administration wages a trade war with China.

With AAP, Reuters, Bloomberg

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