The Overnight Report: Risk Off Mood Continues

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US markets were volatile in overnight trade as participants digest the flow of tariff news ahead of April 2, “Liberation Day” (LOL). After a sell off in the ASX200 yesterday, SPI futures are suggesting a slightly weaker open awaits.

Good Morning,

Markets, all things tariff considered, took President Trump’s news in their stride. Price action was down, but not overwhelmingly negative.

Mixed messages on the tariff front and in economic data contributed to the choppy action in US markets.

President Trump on Wednesday evening announced a 25% tariff will be imposed on all car and light truck imports into the United States. The announcement sent shares in car makers sharply lower, yet he also added reciprocal tariffs will be “lenient”.

The S&P500 dropped -0.3%, while the Nasdaq shed -0.5% and the Dow Jones Industrial Average ended -0.4% lower. GameStop shares sank -22%. The company said it plans to privately offer US$1.3bn of convertible senior notes and will use some of the proceeds to buy bitcoin. Dollar Tree shares advanced 11% after the retailer said it has agreed to sell its Family Dollar business.

There were mixed performances in the mega-cap space which also contributed to the intra-day index volatility. Tesla rose 0.4%, which is perceived as a relative beneficiary of the auto tariff action on imported vehicles, while Nvidia ended down -2.1% and underperformed along with other chipmakers.

Sentiment for AI-exposed companies will be tested with the pricing of the CoreWeave IPO which is coming to the market tomorrow. Media reports suggest Nvidia will anchor the offering at US$40 per share with a US$250m order. Nvidia is already a significant customer of CoreWeave, which rents out remote access to computers based on Nvidia’s chips. Nvidia currently owns about 6% of the company.

The US 10-year yield settled at 4.369%, up from 4.337% on Wednesday, and gold traded above US$3,060/oz in New York. Mounting trade uncertainty has driven demand for safe-haven assets.

The US 4Q 2024 GDP showed expansion in activity during the period that was underpinned by consumer spending; however, the report’s impact on the market was muted due to its historical context.

Weekly Initial Claims of 224K, with consensus at 225K, suggest jobless claims remain steady with a solid labour market.

European stocks slipped overnight with US tariffs weighing on overseas manufacturers like BMW, Toyota and Hyundai. In Asia, Japan’s Nikkei 225 lost -0.6%, while the Hang Seng Index added 0.4%. South Korea’s Kospi lost -1.4%.

Markets will be watching the US PCE price indicator, to be announced on Friday, for any pick up in inflationary pressures.

The Australian Prime Minister has announced the Federal Election date for May 3.

US puts 25% tariffs on autos: Extract from ANZ

“Ahead of the April 2 Liberation Day’, President Trump announced he will levy 25% tariffs on autos not made in the US. He indicated that these auto tariffs will come into effect from 3 April. To begin with, these will target fully assembled vehicles, but subsequently its scope will expand to include auto parts such as engines, transmissions, etc.

“Trump also declared that if the European Union and Canada are working together “to do economic harm” to the US, further tariffs will be imposed. Over 90% of US motor vehicle imports come from just five trading partners: EU, Canada, Mexico, South Korea and Japan.

“The EU, Canada and a few other trading partners have expressed their intention to retaliate once they assess the full scale of tariffs. Concerns about a protracted trade war appear to have escalated ahead of the 1 April trade review submission and 2 April tariff announcements.”

US Index Performance year-to-date

-Dow Jones Industrial Average: -0.6% YTD

-S&P500: -3.2% YTD

-S&P Midcap 400: -4.9% YTD

-Russell2000: -7.4% YTD

-Nasdaq Composite: -7.8% YTD

Corporate news in Australia

-Dollarama, a Toronto-listed discount retailer with a $41bn market capitalisation, wants to buy The Reject Shop for $6.68 a share, more than double the last close and 2 times its share price at the start of the year.

-Bellevue Gold ((BGL)) has requested a trading suspension as it mulls a potential downward adjustment to its production guidance.

-CoStar increased its bid for Domain Holdings ((DHG)) at a revised price of $2.8bn, which is lower than the current valuation based on the last closing price of $4.47.

-Nine Entertainment ((NEC)) experienced a data breach exposing personal data of 16k SMH, Age, and AFR subscribers.

-Apax considers Trade Me sale via IPO or private equity bid, with KKR, TPG, and Blackstone among potential buyers.

-Centuria Select Opportunities Fund (unlisted) acquires a $39m industrial facility in Perth, its largest industrial deal since 2023.

-Corporate Travel Management ((CTD)) chief executive for Australia and New Zealand, Greg McCarthy, is stepping down on June 30.

On the calendar today:

-NZ March ANZ cons confidence

-JP March CPI

-CH 4Q BoP

-UK 4Q GDP

-US Feb PCE

-ADRIATIC METALS PLC ((ADT)) AGM

-BRAVURA SOLUTIONS LIMITED ((BVS)) ex-div 1.60c

-BRAVURA SOLUTIONS LIMITED ((BVS)) ex-div 8.92c

-COMMS GROUP LIMITED ((CCG)) ex-div 0.13c (100%)

-CENTURIA INDUSTRIAL REIT ((CIP)) ex-div 4.08c

-CENTURIA OFFICE REIT ((COF)) ex-div 2.53c

-DEXUS CONVENIENCE RETAIL REIT ((DXC)) ex-div 5.14c

-DEXUS INDUSTRIA REIT ((DXI)) ex-div 4.10c

-GARDA PROPERTY GROUP ((GDF)) ex-div 0.23c (13%)

-GARDA PROPERTY GROUP ((GDF)) ex-div 1.58c (13%)

-RURAL FUNDS GROUP ((RFF)) ex-div 2.93c

-VULCAN ENERGY RESOURCES LIMITED ((VUL)) AGM

-WAYPOINT REIT LIMITED ((WPR)) ex-div 4.12c

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

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.)

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