The Overnight Report: (Another) Sour Friday

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US President Donald Trump said Thursday that he would allow Mexico and Canada to avoid tariffs on most exports to the United States for one month, saying he would exempt products that are traded under the rules of the US-Mexico-Canada Agreement, the trade pact he signed in his first term.

These back and forth declarations from the White House are not having the desired effect (if that’s the aim) and markets continued selling off last night.

SPI futures are indicating another dour day ahead.

World Overnight
SPI Overnight	8019.00	– 79.00	– 0.98%
S&P ASX 200	8094.70	– 46.40	– 0.57%
S&P500	5738.52	– 104.11	– 1.78%
Nasdaq Comp	18069.26	– 483.48	– 2.61%
DJIA	42579.08	– 427.51	– 0.99%
S&P500 VIX	25.10	+ 3.17	14.46%
US 10-year yield	4.29	+ 0.02	0.49%
USD Index	104.14	– 0.16	– 0.15%
FTSE100	8682.84	– 73.00	– 0.83%
DAX30	23419.48	+ 338.45	1.47%

By Chris Weston, Head of Research, Pepperstone

Good morning.

The great unwind of US equity evolves and gathers momentum, and while there are few signs of panic, funds and fast-money accounts cut equity risk, with capital preservation the play of the day.

NAS100 futures pushed through the 200-day MA with some ease, and have printed new run lows, with the MAG7 (ex-Apple and Alphabet) plays and those with a high concentration of global positioning at the heart of the liquidation.

Traders increase equity volatility hedges. Shorting activity also builds, notably in the lower quality names and the businesses with high leverage, poor gearing and volatile cash flow generation.

Confusion reigns around the Trump Administration policy agenda, and while we’ve seen yet another pause on Canadian and Mexican tariffs until 2 April, the lack of consistency to hold policy firm further limits the visibility US businesses have to position margins and to make strategic planning decisions.

Trump detailed that he’s “not even looking at the stock market” it’s easy to be sceptical on that call, but Trump needs to portray control when putting through the hard policies.

The price action in US risk markets speaks to the broad collective holding increased doubts that the Administration has that control they see confusion and a rising risk that US public policy will accelerate job losses to the point that business confidence and household consumption trends will be taken over a threshold, which could be hard to reverse.

Despite US Treasure Secretary Scott Bessant’s call that it will be Trump’s Economy’ in 6-12 months, whatever Trump throws at the situation may ultimately be too late.

Compounding the issue is that investors also have real investment alternatives to US equity, with China and EU equity the obvious beneficiaries.

It’s in these jurisdictions that we see an increased focus on innovation, coming amid a backdrop of recent economic momentum, and fiscal and monetary support.

Clearly, a poor US nonfarm payrolls (NFP) report in the session ahead will not be tolerated by risk markets and will likely see an outsized reaction in US 2yr Treasuries and US interest rate swaps pricing.

Managing the risk that inherently comes with NFP is always problematic, as we’re hit with a number of variables to consider: The level of net job creation, revisions (to prior reads), the unemployment rate, and average hourly earnings, and the depending on sentiment at the time, the market will see what it wants to see in the data.

The bear case would be an outcome of less than 140k jobs, a 4.1%-plus unemployment rate and an uptick in average hourly earnings and should the totality of the data move in this direction, then one can assume the selling pressure on US equity will build.

A poor NFP report would also set us up for a huge week ahead, with significant emphasis and market sensitivity placed on the NFIB small business optimism survey, US core CPI and PPI, with retail sales also falling on the radar, although not released until 17 March.

Asia looks to follow the lead the US has kindly provided, with the NKY225 called -1.7%, the HK50 -1.3% and the ASX200 -1%.

Traders will naturally be thinking ahead and pre-positioning for the US NFP and the potential for impactful news through the weekend that would raise the possibility of gapping risk on Mondays open.

Japan is the most vulnerable to selling pressure, with a stronger JPY and a high weighing of tech plays that are not attracting the global capital flows, unlike Alibaba and Tencent in HK.

On the calendar today:

-China Feb Trade Balance

-Eurozone 4Q GDP

-US Feb NFP

-US Feb Unemployment

-US Jan consumer credit

-Aussie Broadband ((ABB)) shares go ex-div

-Ampol ((ALD)) ex-div 5c (100%)

-Argo Global Listed Infrastructure ((ALI)) ex-div 4c (100%)

-Endeavour Group ((EDV)) ex-div 12.50c (100%)

-PRL Global ((PRG)) ex-div 2c (100%)

-Viva Energy Group ((VEA)) ex-div 3.87c (100%)

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

Corporate news in Australia:

-Arcadium Lithium is now Rio Tinto Lithium

-Rio Tinto ((RIO)) is investing US$1.8bn to extend its Brockman mine in the Pilbara

-Brookfield has reportedly cooled on its takeover bid for Insignia Financial ((IFL)), with sources indicating a formal proposal at $4.60 per share is now unlikely

Spot Metals,Minerals & Energy Futures
Gold (oz)	2921.10	– 9.60	– 0.33%
Silver (oz)	33.19	– 0.06	– 0.18%
Copper (lb)	4.79	– 0.02	– 0.36%
Aluminium (lb)	1.22	+ 0.02	1.51%
Nickel (lb)	7.05	– 0.04	– 0.58%
Zinc (lb)	1.32	+ 0.02	1.77%
West Texas Crude	66.24	– 0.11	– 0.17%
Brent Crude	69.54	+ 0.17	0.25%
Iron Ore (t)	101.24	+ 0.52	0.52%

By Charlotte Daughtrey, Equity Investment Specialist at Federated Hermes

We are seeing more short-term, momentum-driven behaviour in the market due to the frequent issuance of executive orders and policy announcements.

However, President Trump’s pro-growth, pro-economy agenda is particularly supportive of small and mid-cap stocks, which form the backbone of the US economy.

Revenues for small and mid-cap companies are 70-80% domestically focused whereas their large cap peers are at 50%.

This should provide insulation from tariffs and these small and mid-cap companies will benefit from the “America First” agenda and proposed tax cuts. 

We anticipate this short-term market volatility to subside in the coming weeks as the initial surge of activity from the new administration diminishes, and a clearer understanding of the policy landscape emerges.

Despite the current short-term fluctuations, we remain confident in the strength of the underlying domestic economy.

In these uncertain times, holding a portfolio of cash-generative companies with strong balance sheets appears to be a prudent strategy.

The Australian share market over the past thirty days

Index	06 Mar 2025	Week To Date	Month To Date (Mar)	Quarter To Date (Jan-Mar)	Year To Date (2025)
S&P ASX 200 (ex-div)	8094.70	-0.95%	-0.95%	-0.79%	-0.79%

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
AFG	Australian Finance Group	Upgrade to Outperform from Neutral	Macquarie
ARB	ARB Corp	Downgrade to Neutral from Buy	Citi
COH	Cochlear	Upgrade to Buy from Neutral	Citi
IDX	Integral Diagnostics	Upgrade to Buy from Neutral	Citi
NEM	Newmont Corp	Upgrade to Buy from Accumulate	Ord Minnett
NWH	NRW Holdings	Downgrade to Buy, High Risk from Buy	Citi
PDN	Paladin Energy	Upgrade to Buy from Neutral	UBS
RMD	ResMed	Upgrade to Buy from Neutral	Citi
SXL	Southern Cross Media	Downgrade to Accumulate from Buy	Ord Minnett

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.)

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