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The ASX200 closed down 0.2% on Monday, largely shrugging off weakness across US futures markets as Trump’s tariff deadline moved ever closer. Over 40% of the main board managed to close higher, with most of the major movers on the day being news-led. However, further weakness in the banks and gold stocks caught our attention. Trade tensions are back on investors’ radar, after President Trump threatened to impose unilateral tariffs on dozens of countries in the coming days. Major US trading partners hurried over the weekend to secure trade deals or lobby for extra time, while Treasury Secretary Scott Bessent indicated that some countries lacking an agreement by Wednesday will have the option of a three-week extension to negotiate. Initially, we thought the can was getting kicked down the road again, but now it feels like the president wants to dispel the phrase.
- Trump’s latest battle cry is a 10% import tax on “any country aligning themselves with the anti-American policies of BRICS – just as BRICS nations led by Brazil, Russia, India, China and South Africa were gathering in Rio de Janeiro for meetings starting Sunday.
- Overnight, the President unveiled the first in a wave of promised letters threatening to impose higher tariff rates on key trading partners, including 25% tariffs on goods from Japan and South Korea beginning Aug. 1.
The RBA is expected to cut interest rates by 0.25% today, the first back-to-back easing since before COVID. Plus, another two are expected before Christmas, bringing the cash rate down to 3.1%. Interestingly, the real estate and consumer discretionary names struggled on Monday, implying much of the good news is already built into the market. The accompanying rhetoric will be scrutinised today, but we see no reason for Michele Bullock to deviate from the RBA’s dovish tack. The dip by the $A below 65c on Monday illustrates the deepest market of all (FX) is also looking for a cut today.
Overseas markets fell, and the dollar climbed after Trump began unveiling his tariff plans, with the US indices receiving the brunt of the selling. The German DAX advanced +1.2% in Europe while the UK FTSE slipped by 0.2%. In the US, the S&P 500 and the tech-based NASDAQ retreated 0.8%, as “risk off” led the way as tariff concerns became the market’s focus.
- The SPI futures are calling the ASX200 to open down 0.5% this morning, with only the defensives likely to be firm.
Three stocks caught our attention in the winners enclosure on Monday for different reasons but they all look constructive.
