China's Stimulus Can't Save ASX from Tariff Tremors

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The Australian share market retreated on Wednesday, with the S&P/ASX 200 Index falling 0.70% (57 points) to 8,141.10, after dropping more than 1% earlier in the session. Nine of the eleven sectors closed in negative territory, with Consumer Staples (-3.56%) leading the declines. The sell-off followed a volatile Wall Street session triggered by the implementation of new U.S. tariffs on Canada, Mexico, and China, which sparked retaliatory measures from these countries.

Chinese markets rallied after Beijing announced a significant economic stimulus and plans to push its deficit to the highest level in over three decades to boost growth. Despite the positive developments in China, Australian shares maintained their losses throughout the session.

Energy (-1.68%) stocks weighed heavily on the index as oil prices approached $US70 per barrel, hitting their lowest level this year. Banking stocks also retreated, with Commonwealth Bank falling 0.87%. Consumer staples were particularly hard hit, such as Coles (-4.35%) and Treasury Wine Estates (-5.59%), while Woolworths (-3.91%) also fell In contrast, gold miners performed strongly as bullion prices stabilised near record highs, with West African Resources (+6.50%) emerging as the market's top performer.

ASX Company News

• Clarity Pharmaceuticals (+3.37%) has signed a Supply Agreement with UQ AIBN for copper-64 to support its clinical trials of 64Cu-SAR-bisPSMA in Australian prostate cancer patients.

• Insurance Australia Group (+1.43%) shares climbed to $7.83 after the insurer confirmed its reinsurance arrangements would protect shareholders from losses when Tropical Cyclone Alfred strikes Australia's east coast this week.

• WiseTech Global (+1.18%) has notified investors it's temporarily non-compliant with ASX rules requiring three non-executive directors on its Audit & Risk Committee following the resignation of four directors. The company expects to appoint at least one new independent director within four weeks to restore compliance.

Wall Street

Wall Street endured a wild ride on "Tariff Tuesday" as markets opened deep in the red before staging a dramatic afternoon comeback that briefly erased massive losses. The S&P 500 came within 30 minutes of accomplishing something not seen since the bull market began in October 2022—turning a 2% decline into a positive finish—before ultimately succumbing to late selling pressure to close down 1.2%. Financial (-3.54%) stocks bore the brunt of the selling, with the sector experiencing its worst daily drop since the Silicon Valley Bank collapse in 2023.

The tech-heavy Nasdaq (-0.35%) showed relative strength, falling just 0.35% after approaching correction territory earlier in the session. While beaten-down A.I. stocks and massive short covering helped fuel the midday rebound, the bounce proved unsustainable. Among the Magnificent 7, Nvidia (+1.69%) and Alphabet (+2.34%) managed to post strong gains even as broader markets declined.

Target (-3.00%) shares fell 3% despite beating earnings expectations as the retailer warned of a "meaningful" first-quarter profit decline amid "ongoing consumer uncertainty" and weak February sales. CEO Brian Cornell cautioned that Trump's 25% Mexican tariffs could increase imported produce prices, adding to concerns about consumer spending and economic health.

S&P 500 Sector Performance

Economic Data

• Australian GDP grew by 0.6% QoQ in Q4 of 2024, accelerating from 0.3% in Q3 and exceeding market consensus of 0.5%. This marked the 13th quarter of expansion and the fastest pace since Q4 2022.

• China General Services PMI unexpectedly advanced to 51.4 in February 2025, up from January’s four-month low of 51.0, surpassing market forecasts of 50.8.

• The Euro Areas Unemployment rate remained unchanged at 6.20% in January, marking the fourth consecutive month at this level.

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🌎️ Around The Globe

• Anthropic has raised $3.5 billion in a new funding round that values the Claude A.I. chatbot maker at $61.5 billion. The investment, backed by Salesforce, Cisco, Jane Street, and Fidelity, will fund computational capacity expansion and growth initiatives in Asian and European markets.

• Chipotle says it will not raise menu prices to offset tariff-related cost increases, according to CEO Scott Boatwright.

• Kraken announced that the SEC has agreed in principle to drop its lawsuit against the major cryptocurrency exchange "with prejudice, with no admission of wrongdoing, no penalties paid and no changes to our business.”

• TSMC plans to invest $100 billion in the U.S. over the next four years and expand its operations in Phoenix, Arizona. The Taiwanese chipmaker joins other tech giants like OpenAI, Apple, and SoftBank, which are becoming significant backers of American investment.

• Uber and Waymo have launched their "Waymo on Uber" robotaxi service in Austin through a new partnership, strategically timing the debut just before the South by Southwest festival.

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*1-year, 3-year and 5-year returns are calculated as of January 31, 2025.

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