Investors in Australian shares hoping for mid-week good news would have been disappointed to learn major United States indices were down overnight and to see futures trading foreshadowing more red ink on Wednesday.
New tariffs proposed by U.S. President Donald Trump added to market uncertainty and volatility, pushing U.S. stock benchmarks lower and virtually ensuring the Australian Securities Exchange (ASX) will drop past the seven month lows touched in Tuesday.
At 9 am AEDT (10 pm GMT Tuesday ) the S&P/ASX 200 March share price index contract was trading 75 points (0.95%) lower than the previous settlement at 7,809 points.
The Dow Jones Industrial Average closed 1.1% lower, the S&P 500 dropped 0.8% and the Nasdaq Composite eased 0.2% on Tuesday (Wednesday AEDT) after a whirlwind day of tit-for-tat trade announcements.
Trump threatened to double tariffs on Canadian steel and aluminium but withdrew the plan after Ontario Premier Doug Ford agreed to temporarily suspend a surcharge on electricity exports to the U.S.
Chief CommSec Economist Ryan Felsman said Australian shares would be under pressure today following media reports that Australian steel and aluminium exports to the United States would not be exempt from tariffs.
“So we may see that drag down stocks related to commodities in Australia,” Felsman said.
He expected weakness in the share prices of aluminium producer Alcoa Corp, steelmaker BlueScope, and miners BHP, Rio Tinto and Fortescue but noted the iron ore price was up overnight and BlueScope’s U.S. operations may insulate it somewhat.
“Certainly the lead in from the U.S. last night was not encouraging for us,” Felsman said.
Although they are unlikely to be alone, Brambles, Breville and News Corp shares would be expected to come under pressure today on the basis of trading ex their latest dividends for the first time.
On the bond markets, the yield on Australia’s 10-year government bond was 0.07% down at 4.458%, while the two-year yield was 0.13% lower at 3.798%.
