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A better finish for stocks today with the market holding onto the early gains, booking its first positive finish for the week so far. Trade tariffs remain front and centre with China’s move to target US energy providing a catalyst for Australian producers and supporting the broader mining sector as a result.
The news out of the Whitehouse is crossing our screens at unprecedented speed, and traders are dancing accordingly. With Chinas 15% tariff having “Trumped” the US President’s 10% move, we have to think, what next. We’re sure Trump wont sit back and do nothing. Yesterday morning felt like Trumps “Art of the Deal” had brought global markets back from the brink of a Trade War but China will prove a far tougher adversary, as we’ve already seen by their retaliation as opposed to acquiescence. However, after two volatile nights of US trade, earnings season remains more important to markets, at least for now.
The ASX rose sharply in early trade, up 67pts at the get go before the rally ran out of steam in the afternoon, void of the backbone provided by the banks, while U.S futures came under pressure late in the session when China announced an investigation into Google for alleged antitrust violations and imposed new tariffs on US products in response to Trump’s 10% tariff on goods from Beijing.
The ASX200 was hit hard on Monday as tariffs towards Canada, Mexico and China came into play. The U.S. previously enjoyed about $US1.6 trillion in business with the three countries leading investors to question the potential impact on economic growth and corporate profits.
A brutal start for the ASX weighed down by the potential of a looming trade war post Trump’s imposition of tariffs on Canada, Mexica & China, with only Canada retaliating at this stage. The concern being, this will escalate and put upward pressure on inflation while also having a negative impact on global growth, at a time when markets are trading near all-time highs.
Much of early last week was focused on Chinese AI startup DeepSeek which launched a free, open-source large-language model in late December, claiming it was developed in just two months at the cost of under $6 million. According to market tracker App Figures data, the DeepSeek mobile app was downloaded 1.6 million times by Jan. 25th and ranked No. 1 in iPhone app stores in Australia, Canada, China, Singapore, the US, and the UK.
The ASX200 closed at its highest ever level, surpassing its previous record set 8 weeks ago. Friday saw the market gain another +0.45% extending January’s advance to +4.57% with the rate-sensitive consumer discretionary, financials, real estate and tech sectors leading the charge. We are only five weeks into the new year, but the local market has already managed to dismiss the Trump inauguration and an AI shakeout courtesy of DeepSeek. Local stocks have followed European indices powering to fresh all-time highs, while US indices have struggled to advance year to-date under the weight of heavy AI selling, e.g. Heavyweight Nvidia (NVDA US) is down over 10% year-to-date.
The market opened strongly this morning up +73 points reaching another intra-day all-time high of 8566 before the froth blew off and it settled up +38pts, still a new all-time closing high of 8532 – the first time the index has closed above 8500 after multiple failed attempts back in early December.
The ASX200 posted a new high on Thursday, albeit only by one point, before surrendering some of its early gains to finish up +0.55%, its highest close since December 3rd. Overall, this was a very encouraging result for the bulls as traders digested the Fed’s rhetoric suggesting a long pause on rates and earnings results from a trio of the “magnificent seven” tech giants.
The ASX hit a new all-time high around lunchtime, though only by a whisker, printing 8515, 1pt above its 6th of December milestone, but we’ll take it! Interest rate expectations are getting a lot of airtime with NAB the last of the big four to join the call for a Feb rate cut – the market is well and truly expecting the RBA to finally make a move, the first change since they raised rates in November of 2023.
