Markets at a glance 12 March

Around the Grounds

The Australian share market has officially entered correction territory, set for its lowest level since August 9, if losses hold as investor appetite wanes on local media reports the White House has confirmed no exemptions from the US steel and aluminium tariffs. Back in February, President Trump agreed to consider exempting Australia from tariffs in the view of the US trade surplus with the country. Tariffs totalling 25% on all imported steel and aluminium products in the US originating from other countries will go into effect on Wednesday morning, local time.

In response Prime Minister Anthony Albanese says Australia will not impose reciprocal tariffs on the United States despite calling the move “entirely unjustified… and against the spirit of our two nations’ enduring friendship”. Prime Minister Albanese added imposing reciprocal tariffs would only push up prices for Australian consumers and spur inflation.

Australian steel and aluminium exports to the US represent less than 0.2% of the total value of the country’s annual exports and are not in the top 10 products Australia sells to the United States.

To the sector action, all the majors, bar gold, are in the red as the banking index leads the slump down nearly 2% with shares of Commonwealth Bank (ASX: CBA) dropping close to the same amount at the time of writing.  

Australian listed travel companies are also in the doldrums as worries mount over consumer behaviour. It comes as major US carrier Delta Air Lines’ earnings outlook raised concerns around demand and of course, an economic slowdown. Webjet (ASX: WEB), Flight Centre (ASX: FLT) and Corporate Travel Management (ASX: CTD) are all lower with travel-linked stocks in the US tumbling. Delta and Airbnb closed down over 7 and 5% respectively.

Real Estate stocks are down, kissing their lowest level since July last year, while the major miners have also dropped.

Bucking the trend, the gold plays with stocks bolstered by a soaring bullion price as investors flocked to the safe-haven on the back of those tariff woes. The AXGD is up nearly 17% YTD, including the current session moves, outperforming a 4.8% loss on the ASX 200 index.

In the news

Getting a quick check on some of the stocks to watch in today’s trade. Australian listed shares of Brambles (ASX: BXB) and James Hardie (ASX: JHX) are in the red on those US steel tariff uncertainties. Shares of Australian bourse operator ASX (ASX: ASX) are also under pressure as the benchmark slides into correction territory.  

Investors are seeing some bright spots in Australian copper miners as the price of the metal soar on a weakening dollar and a decline in London Metal exchange inventories. Sandfire Resources (ASX: SFR) and Australian listed shares of Capstone Copper (ASX: CSC) are reaping the benefits to trade up 3 and 5% respectively.  

Outside of the tariff turmoil, there are reports Rio Tinto (ASX:RIO) is set to raise up to $9 billion in US investment grade bonds as the miner seeks funding for its recently-closed buyout of Arcadium Lithium (ASX: LTM). According to Bloomberg News Rio is expected to market the debt in eight parts and will include a long-term note with a maturing of 40 years.

Earlier in the month Rio closed its $6.7 billion takeover of US based Arcadium as it looks to diversify away from iron ore towards critical minerals and battery metals.

Finally, to the broker space, Morgan Stanley is out with a note on the retailers, with analysts saying Coles (ASX: COL) is closing its margin gap with larger rival Woolworths (ASX: WOW). The broker has lifted its PT on Coles to AU$21.70 from AU$18.40 and upgraded the stock to ‘over-weight’ from ‘equal-weight’. On the flipside, Woolworth’s PT has been trimmed to AU$44 from AU$34 a share, with an ‘over-weight’ rating retained.

Going global

Rounding things out on the global stage, trade across the region is volatile on the back of those US tariff and global growth concerns. Tokyo’s Nikkei 225 has had a whip-saw week with investors buying the dip after sharp declines yesterday. After see-sawing between gains and losses for much of the morning session the Nikkei has managed to get back in the black and recover from yesterday’s six-month low. MSCI’s broadest index of Asia-Pacific shares outside Japan is also marginally higher with Hong Kong, Shanghai, and Singapore broadly steady.  The uncertainty has sent the CBOE VIX (or fear index) to its highest level since August. US equity futures are back on line and are broadly steady ahead of the start of the Wall Street session.

On the currency front, the euro is rising at a five-month high, on Ukraine’s readiness to accept a month-long ceasefire with Russia, with the rouble up to a seven-month high overnight.  The big dollar has sunk, the Canadian dollar touched a one-week low overnight before recovering while the Japanese yen inched away from a five-month high.

Looking ahead, investor focus turns to US inflation data released this week, though it is likely to be too early to show much of a tariff hit alongside The Bank of Canada’s policy meeting. The BOC will be closely watched to see what policymakers are thinking as the threat of a tariffs loom large. Futures are tipping another rate cut, making it the seventh in a row for the Canadian central bank.

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