Weekly wrap: tariff fears keep pressure on ASX despite late rally
WEEKLY MARKET REPORT
Australia’s share market decoupled from Wall Street on Friday to record a rare daily gain but still could not avoid another weekly loss as tariff fears continued to roil markets.
Wall Street declined to reach a 10% technical correction after President Trump threatened to impose 200% tariffs on wine from the European Union in retaliation for a 50% levy on American whiskey but Australian shares headed in the opposite direction thanks mainly to a rally in Australian iron ore and gold mining stocks.
Our market was also boosted by news that the United States may have avoided a government shutdown after an earlier stalemate in the Senate – news that sent US futures higher.
The ASX 200 rose 0.5%, or 40.6 points, to close at 7789.7 points, marking the first positive day since Monday.
It wasn’t hard to discern the overall direction for the week though, with the index falling almost 2%.
Miners ride rising iron ore price higher
A rise in Singapore iron ore futures which climbed 1.3% to US$103.55 a tonne saw all of the big miners gaining value.
BHP shareholders (ASX: BHP) enjoyed a 1.1% rise to $38.65, Rio Tinto (ASX: RIO) rose 1% to $117.10 and Fortescue (ASX: FMG) rose 2.7% to $16.27.
Gold miners shared the positive glow, after the shiny metal hit a new record of $US2990.02 an ounce after enjoying the best week of price gains for the year.
Shares in Newmont (ASX: NEM) rose an impressive 5.7% to $73.43 while Regis Resources (ASX: RRL) jumped by 5.6% to $3.56.
By the end of trade seven of 11 sectors were up, with utilities and miners recording the best of the gains.
Banks shedding value
Things were not so positive for the banking sector with Commonwealth Bank (ASX: CBA) shares falling 1.1% to $142.36.
Shares in its Sydney rival Westpac (ASX: WBC) also fell 0.1%, ANZ (ASX: ANZ) shares also fell 0.2% but NAB (ASX: NAB) shares were the best of the bunch, up 0.3%.
ANZ announced a partnership with the Australian government that will support its long-term commitment to Pacific banking, with the government agreeing to provide a guarantee worth up to $2 billion over the next decade to assist it in maintaining its Pacific network.
Energy stocks were also weaker with shares in sector leader Woodside Energy (ASX: WDS) down 1.4% to $22.38.
Amid some of the more notable moves, shares in A2 Milk (ASX: A2M) posted a strong gain, up 8.8% to $8.65, on predictions that Chinese officials will soon announce measures to boost consumption.
The company’s milk sales in China have been growing strongly.
Management shake up buoys Myer
Shares in retailer Myer (ASX: MYR) jumped 1.4% to 75¢ after executive chair Olivia Wirth restructured the retailer’s executive team.
Lithium miner Liontown Resources (ASX: LTR) saw its shares rise 4.9% to 65¢ after it narrowed its losses in the half-year to December and geared up to resume underground production.
Gold miner Catalyst Metals (ASX: CYL) shares rallied 5.2% to $4.64 after starting production at its Plutonic East site in Western Australia, extracting ore on time and within budget.
Small cap stock action
The Small Ords Index fell 1.68% for the week to 3004.3 points.
ASX 200 vs Small Ords
The week ahead
In Australia, job figures out on Thursday are expected to see the local economy add about 30,000 new jobs in February, with the unemployment rate set to remain steady at 4.1%.
Globally it is a big week for central banks with the US Federal Reserve Open Market Committee expected to keep the federal funds rate unchanged at 4.25% to 4.5%.
The Bank of Japan is expected to sit on its hands and hold rates steady on Wednesday after it raised its benchmark interest rate in January well the Bank of England is also expected to keep things steady when it announces its rate decision on Thursday.
Another release to watch during the week his Chinese monthly economic activity data with retail spending expected to increase along with industrial production and fixed asset investment although domestic demand is expected to stay subdued.
Apart from the economic releases, President Trump’s continuing release of new tariff barriers is obviously the main market moving event.