The Monday Report – 03 March 2025

This story features ALCOA CORPORATION, and other companies.
For more info SHARE ANALYSIS: AAI
The company is included in ASX200, ASX300 and ALL-ORDS

Having closed February with a heavy feeling and no net gains for the running calendar year, the Australian share market looks poised for a positive start into March this morning.

US equities experienced a good old fashioned end-of-the-month rally on Friday.

With the February results season now officially in the past, the local calendar will increasingly be populated with stocks going ex-dividend.

FNArena’s Monitor is continuing updates from last week’s corporate results:

https://fnarena.com/index.php/reporting_season/

By Chris Weston, Head of Research, Pepperstone

Good morning.

Friday’s meeting between Trump, JD Vance, and Zelensky in the Oval Office will not be forgotten in a hurry.

Market players will naturally have strong personal opinions on how it went down, but will keep emotions in check and refrain from trading the perceived fallout, believing that while the path to a near-term deal appears increasingly challenged, the script can and will evolve rapidly.

Subsequently, with such low confidence to price an outcome, one suspects traders will give this a wide berth until the facts become clear.

Throughout last week we have witnessed long-standing international relationships become damaged and distanced, yet, new alliances emerge, with Canada, the UK and Europe forging closer ties and showing solidarity towards Ukraine.

Reports that Putin may seize on the opportunity and cut a minerals-backed deal with Trump are also in play and if the reporting builds it could spice things up, although the devil would be in the details.

Europe Set the Ramp up the Spending

Europe looks to galvanise from within and become a stronger and more united entity.

Market attention falls sharply on the EU region this week and there are three key aspects that could cause gyrations in the EUR, EU equities and EU bonds markets:

-EU leaders are due to hold an emergency summit on Thursday, with a potential agreement in the works to suspend fiscal limits, which would pave the way for EU nations to follow Germany’s lead and to massively increase defence spending.

-Whether Trump’s threat of a 25% tariff on EU autos (and other imports) comes to fruition.

-EU CPI is released today, with the ECB meeting due on Thursday, with the markets fully expecting a -25bp cut to be announced.

Navigating an Impending Deluge of Tariff Headlines

Tariff headlines are clearly a significant risk for broad market confidence this week, with traders hoping to get a firm outcome on tariff implementation on Tuesday and not see another pushback on the timeline.

Tariffs on Mexico, Canada, China and Europe are the focus, with the prospect that the US Administration pulls the trigger on -25% tariffs on Mexico and Canada, with China set to see its tariff rate increase by an additional -10%.

Mexico appears most likely to get some sort of reprieve, having suggested that they may align with the US and slap tariffs on Chinese imports.

The probability that Canada and China avoid tariff increases seems far lower, and should they kick in as scheduled then volatility and risk-aversion would likely increase across broad markets.

Canada reported hotter Q4 GDP numbers on Friday (+2.6% vs 1.7% eyed), but a 25% tariff increase, that is then countered, would result in clear downside risk for future economic activity.

We should also get Canadian employment data on Friday, where a weaker jobs print could force a -25bp rate cut from the Bank of Canada on 12 March and put the CAD at risk of attracting increased sellers.

A Huge Week Ahead for China

It’s the additional 10% tariff set for China’s imports that is arguably the bigger issue for broad markets.

Front-loaded tariffs on China that get the total tariff rate towards 60% by a far earlier date would significantly impact China’s push to escape its deflation trap.

Subsequently, it would require a more aggressive approach from policymakers to spur domestic consumption and to build an expectancy from households and businesses that the expected returns from investing compare favourably to paying down debt.

Should the additional 10% tariff kick in, we then watch for China’s counter-response; either through an increased appetite to depreciate the RMB or via tariff increases on targeted US goods.

Market players will also be watching for headlines from China’s NPC meeting on Wednesday, where policymakers are expected to announce a RMB2 to 3trn fiscal stimulus a value that risks once again underwhelming the Chinese/HK equity markets and notably at a time when many are banking profits after the blistering run through January and February.

Can Friday’s late session equity rally build?

US equity markets may have seen a solid rally into Friday’s close, but this seems to have been driven by traders squaring positions into the weekend, with short covering and month-end rebalancing flows also a factor.

Granted, we’ve seen numerous indicators portray deep negative sentiment towards high momentum and growth equities, but I’d stop short of saying sentiment at an index level has yet to hit an extreme and enough to really compel the buy-the-dip crowd.

That said, we must be open-minded to the idea that US equity indices could be -3% higher or lower by the end of the week such is the risk to navigate, and what is implied in the volatility markets.

On the calendar today:

-Australia Feb ANZ job Ads

-Eurozone Feb CPI

-US Feb ISM

-Alcoa Corp ((AAI)) ex-div 11c

-Aurizon Holdings ((AZJ)) ex-div 9.20c (60%)

Big River Industries ((BRI)) ex-div 2c (100%)

-Domino’s Pizza ((DMP)) ex-div 55.50c

-FSA Group ((FSA)) ex-div 3.5c (100%)

-Newmont Corp ((NEM)) ex-div 27.50c

-Propel Funeral Partners ((PFP)) ex-div 7.40c (100%)

-Redox ((RDX)) ex-div 6c (100%)

-Regal Partners ((RPL)) ex-div 10c (100%)

-Steadfast Group ((SDF)) ex-div 7.80c (100%)

FNArena’s four-weekly calendar: https://fnarena.com/index.php/financial-news/calendar/

Corporate news in Australia:

-Leaked report reveals major risks and spiralling repair costs for Mineral Resources’ ((MIN)) $3bn Onslow road

-Bega Cheese ((BGA)) is reportedly eyeing Fonterra Oceania purchase in $2bn asset sale

The Australian share market over the past thirty days

For more detail go to FNArena’s Australian Broker Call Report, which is updated each morning, Mon-Fri.

All overnight and intraday prices, average prices, currency conversions and charts for stock indices, currencies, commodities, bonds, VIX and more available on the FNArena website.  Click here. (Subscribers can access prices on the website.)

(Readers should note that all commentary, observations, names and calculations are provided for informative and educational purposes only. Investors should always consult with their licensed investment advisor first, before making any decisions. All views expressed are the author’s and not by association FNArena’s – see disclaimer on the website)

All paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts on the website and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.

Find out why FNArena subscribers like the service so much: “Your Feedback (Thank You)” – Warning this story contains unashamedly positive feedback on the service provided. www.fnarena.com

FNArena is proud about its track record and past achievements: Ten Years On

Click to view our Glossary of Financial Terms