Trump's Latest Tariff Surprise Has the PM on the Phone

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Welcome to Equity Espresso’s Market Recap.

New week, new tariffs. Markets were again reacting to another trade announcement from the White House, as Donald Trump said he would introduce new 25% tariffs on steel and aluminium imports from all countries into the U.S., on top of existing metals duties. Prime Minister Anthony Albanese plans to seek an exemption from the new tariffs for Australia in upcoming talks with President Trump, which are set to happen in the next 24 hours.

The Aussie market traded in the red throughout all of Monday’s session, with the S&P/ASX200 index finishing the day down 28.6 pts. or 0.34% to 8,482.80. Eight of the 11 sectors closed lower, with Technology (-1.38%) stocks leading market declines, as WiseTech (-4.39%) dropped following news of two confidential complaints against founder Richard White.

Material (-0.71%) stocks were another to lose ground, with Fortescue (-1.52%), James Hardie (-1.39%) and Rio Tinto (-1.20%) all falling by more than 1%. Gold climbed above $2,870/oz, approaching record levels, as Trump's announcement of 25% tariffs on steel and aluminium imports sparked safe-haven buying amid rising trade tensions. Northern Star Resources (+0.51%), Evolution Mining (+0.34%) and Perseus Mining (+0.70%) all gained ground.

BlueScope (+1.81%) shares rose as the steelmaker, with $5 billion in U.S. investments and over half its profits from North American operations, is expected to benefit from the new U.S. steel tariffs.

Oil prices stabilised on Monday, with Brent below $US75.00 and WTI near $US71.00 after three consecutive weeks of losses, as markets assess the impact of Trump's tariffs and awaited China's retaliatory measures scheduled to begin Monday.

Company News

• Ansell (+8.13%) plans to raise prices to counter Trump's new tariffs and increased raw material costs. The company reported strong healthcare division growth of 16.3% as COVID-related glove oversupply normalised. Net profit surged 184% to $US55 million, leading to a 34.5% increase in interim dividend to US22.2¢.

• Car Group (-6.95%) reported a 9% revenue increase to $579 million, a 9% increase in EBITDA to $292 million, and a 5% increase in net profit to $123 million. Growth came from the Brazilian Webmotors division and the Australian automotive market. The company increased its half-franked dividend to 38.5 cents per share.

• Incitec Pivot (-1.18%) has reduced its FY25 production forecast for Phosphate Hill to 740-800 kilometric tonnes from 790-860 kilometric tonnes. The company cited sulphuric acid supply disruptions and weather-related impacts at the Queensland facility.

• JB Hi-Fi (-4.60%) reported a 9.8% increase in group sales to $5.67 billion and an 8.6% increase in EBIT to $419.9 million. The company's Australian division saw 7.2% sales growth to $3.88 billion, and online sales increased 16.4% to $682.7 million, signalling a potential improvement in consumer spending conditions.

• Pilbara Minerals (-1.12%) anticipates a net loss of $5-7 million for the December half-year, though EBITDA is expected to remain positive at $71-75 million. The company will release its complete financial results on February 20.

• PYC Therapeutics (+3.59%) has gained FDA approval to begin human trials for PYC-003, a potential first-in-class drug targeting polycystic kidney disease, which affects 1 in 1000 people.

• The Star Entertainment (+13.64%) shot higher after it confirmed media reports that it received multiple, non-binding proposals from Chow Tai Fook Enterprises and Far East Consortium to acquire a 50% stake in The Star Brisbane resort and other assets. The board has rejected these offers as insufficient but continues discussions with both parties, though no transaction is guaranteed.

• WiseTech Global (-4.23%) confirmed it had received two confidential complaints against its Founder, Richard White.

   

Wall Street

U.S. markets declined sharply on Friday, with the Dow falling 0.99%, the S&P 500 dropped 95%, and the Nasdaq slid 1.36%. The losses came after President Trump announced plans for reciprocal tariffs on trading partners, which he plans to detail next week during a news conference.

Consumer Discretionary (-2.52%) stocks declined as all S&P 500 sectors traded lower. The combination of weak jobs data, disappointing consumer sentiment figures, and heightened trade tensions pushed all major indexes into negative territory for the week.

Expedia (+17.27%) shares surged after exceeding Q4 expectations with earnings of $2.39 per share and revenue of $3.18 billion, ahead of analysts’ estimates. The online travel company also announced the reinstatement of its 40-cent quarterly dividend. Amazon (-4.05%) shares dropped despite strong Q4 results, as the company provided lower-than-expected Q1 revenue guidance of $151-155.5 billion, citing significant foreign exchange headwinds. Uber (+6.59%) shares rallied after billionaire investor Bill Ackman revealed Pershing Square Capital Management has accumulated a $2 billion stake, representing 30.3 million shares purchased since January.

S&P500 Sector Performance

Economic Data

• The Bank of England (BoE) cut its benchmark bank rate by 25bps to 4.50% in its February 2025 decision, which was in line with expectations, marking the third rate cut since August last year.

• Canada’s Unemployment rate fell to 6.6% in January of 2025 from 6.7% in February, the lowest in three months, in contrast with market expectations of a 6.8% rise.

• U.S. Consumer Sentiment fell to 67.8 in February 2025 from 71.1 in January and below forecasts of 71.1, according to preliminary estimates.

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🌎️ Around The Globe

• Amazon’s Q4 revenue of $187.8 billion not only exceeded expectations but also surpassed Walmart's annual revenue - the largest company in the world by revenue.

• The Trump administration has delayed suspending the de minimis rule that allows duty-free entry of packages under $800, pending Commerce Department system upgrades. The decision provides temporary relief for Chinese e-commerce platforms like Shein and Temu, as well as U.S. retailers shipping from China.

• GitHub unveiled significant Copilot upgrades, including a new agent mode that can autonomously debug and improve code and a Vision feature that converts images into functional code.

• Honeywell International has announced plans to split into separate companies by dividing its aerospace and automation divisions while proceeding with its advanced materials spinoff.

• Philip Morris International shares hit a record high after being driven by the strong performance of its Zyn nicotine pouches. Smoke-free product volumes rose 25% year-over-year, with Zyn shipments increasing 42% to 165 million cans following FDA authorisation of new flavours.

• Trump Media & Technology Group introduced its fintech brand Truth.Fi and announced plans for "America First-themed" ETFs, with CEO Devin Nunes indicating the company is exploring bitcoin-related strategies as part of its product differentiation plans.

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*1-year, 3-year and 5-year returns are calculated as of December 31, 2024.

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