Weekly wrap: tariff fears erase 2025 gains
WEEKLY MARKET REPORT
Well, that was quick.
In just one frenzied day of trading, the Australian share market erased its entire gain for this year.
Those impressive graphic hillocks from January and February that passed through the 8550 point mark on the ASX 200 are now nothing more than a memory as the market fell right back to where it started the year.
Following on from a negative lead from the US market, the Australian market fell hard over fears that higher tariffs on US imports from China could hit demand for Australian commodities.
Chinese tariffs hit miners, technology
That pushed the market lower with miners and technology stocks the worst hit.
It marked a very negative end to the earnings season with the ASX 200 index slipping 1.2% or 95.8 points to 8172.4 points.
The only sector that showed a rise was the defensive communications services sector with all ten other sectors being led lower, with the technology sector the worst performer.
The share market losses followed an announcement by US President Donald Trump that tariffs would be imposed on Mexico and Canada from next week and also surprised the market with a further 10% tariff on Chinese goods.
That news helped to drive the Australian dollar to its lowest level in almost a month towards US62c as the US dollar surged.
Big miners hit on slower iron ore demand
Particularly hurt by the announcement by President Trump were Australia’s big miners with BHP (ASX: BHP) shedding 2.5% to $39.04, Rio Tinto (ASX: RIO) falling 2.9% to $113.37 while Fortescue (ASX: FMG) shares fell 3.7% to $16.51.
Technology stocks were also hit hard and followed on from big losses for Nvidia which fell 8.5% in US trading.
Shares in software company Wise Tech (ASX: WTC) slid to their lowest level in seven months, falling a further 4.8% to $89.50 following the departure of several directors during the week, with scandal hit billionaire founder Richard White now firmly back in control.
The board of deeply troubled casino group Star Entertainment (ASX: SGR) had some particularly bleak news, saying they’re not sure the company can continue to trade beyond Friday with a range of conditions needing to be met for the company to remain in operation.
Shares in the casino operator fell hard down 15.4% to just 11c.
Some rare good news
It wasn’t all bad news on the share market with shares in retailer Harvey Norman (ASX: HVN) rising 2.6% to $5.22 after half year sales revenue hit $4.8 billion.
Harvey Norman enjoyed higher revenue from franchises across its portfolio and was also helped by international store openings.
Another rare bit of positive news came from TPG Telecom (ASX: TPG) with its shares rising 2.4% to $4.63 after it reported a 3.4% rise in underlying earnings to $2 billion.
Australia’s third biggest telecom group said a new network sharing agreement with Optus had helped to quickly increase the number of mobile customers.
Some strong numbers also propelled market darling Life360 (ASX: 360) with shares rising 7.2% to $23.30 after it beat its earnings guidance.
The group is now approaching a staggering 80 million global users for its popular family tracking app.
Shares in Vista Group (ASX: VGL) also rallied hard, up 16.4% to $3.40 after earnings soared in 2024 as the data analytics provider reported a jump in clients moving over to its cloud solution.
Not performing as well after revealing its profit report were shares in Endeavour Group (ASX: EDV) which fell by 7.2% to $4.17 after its interim profit fell 15.1%, driving the retailer and hotel operator to cut its dividend to 12.5c.
Shares in Johns Lyng Group (ASX: JLG) group fell 13.3% after the company went ex-dividend on Friday, a fate that may await many other companies whose shares also go ex-dividend in the coming week.
Small cap stock action
The Small Ords index fell 2.49% this week to close at 3136.8 points.
ASX 200 vs Small Ords
The week ahead
Obviously, any further news about tariff rises will be bad for markets in the coming week.
Apart from Trump news, there will be some significant Australian data releases in the coming week which could also move share prices.
The biggest of those is the national accounts which are issued on Wednesday and which are expected to show that the Australian economy as measured by gross domestic product is expected to expand by 0.5% in the December quarter.
The annual growth rate could also edge higher to 1.2%.
There will be plenty of news for the US economy which is expected to add around 158,000 non-farm payroll jobs in February with the unemployment rate steady at 4%.
During the week around 80 Australian listed companies will trade without their dividend payout, with an estimated $622 million worth of dividends to be paid to investors over the week.
As usual if those in dividends are reinvested into the market, they should help to support share prices although those shares trading without dividends are likely to fall.