ASX set to slide after Wall Street slump as Trump doubles down on tariffs
In the bond market, the yield on the 10-year Treasury fell to 4.16 per cent from 4.24 per cent. It’s come down sharply since January, when it was approaching 4.80 per cent, as worries have built about the possibility of a slowing US economy.
Wall Street is coming off a rocky couple of weeks, starting after the S&P 500 set a record following a parade of fatter-than-expected profit reports from big US companies. Then, the market dove sharply amid several weaker-than-expected reports on the US economy, including a couple showing households are getting much more pessimistic about inflation because of the threat of tariffs.
“Markets have been expressing growing concerns about a potential slowdown in the US,” said Florian Ielpo at Lombard Odier Investment Managers.
US earnings estimates don’t fully reflect potential risks from President Trump’s proposed tariffs, according to Citigroup strategists led by Scott Chronert.
Still, the outlook is more optimistic when viewed at the single-stock and sector level, they say.
“A high-level emphasis on index earnings and related valuations can be misleading. As we head further into ’25, the moniker that it’s a market of stocks not a stock market may take on growing importance, particularly as Trump policy impacts become clearer,” they said.
Trump said he would plow ahead with the new tariffs on Canada and Mexico starting on Tuesday US time, a broadside against the two biggest US trading partners that underscores his push to remake global trade.
“No room left for Mexico or for Canada,” Trump told reporters on Monday when asked if the US’s North American neighbours could reach a deal to put off the duties, as they did a month ago. “They’re all set. They go into effect tomorrow.”
The White House later said Trump also signed an order doubling a tariff on China to 20 per cent that will take effect shortly after midnight in Washington. The directive said Beijing had “not taken adequate steps” to address the flow of illicit fentanyl into the US.
The president’s remarks doused hopes of avoiding an all-out trade war; Canada is preparing its own retaliatory tariffs, and Trump has another round of levies set to kick in next week on steel and aluminium.
“The markets have woken up to the fact Trump is serious about tariffs,” said Josh Lipsky, senior director of the Atlantic Council’s GeoEconomics Center.
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The long-promised duties would easily be among the most sweeping of the Trump era, applying to around $US1.5 trillion ($2.4 trillion) in annual imports. They would put a 25 per cent tariff on all imports from Canada and Mexico, except Canadian energy, which would face a 10 per cent rate.
The market’s recent slump has hit Nvidia and some other formerly high-flying areas of the market particularly hard. Nvidia fell 8.7 per cent while Elon Musk’s Tesla lost 2.8 per cent.
In other international markets, in Hong Kong, Chinese bubble tea chain Mixue Bingcheng’s stock soared 43 per cent following its $US444 million debut on the market. Its jump came as the Hang Seng index rose 0.3 per cent. Indexes rose by even more across Europe and in Tokyo. European markets leaped after a report showed an easing of inflation in February.
