The Overnight Report: US Quarter End Bounce

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Month and quarter end offered some relief bottom fishing in US markets as traders tested technical lows earlier in the day. After a punishing performance on the ASX yesterday, futures are up 67 points.

World Overnight
SPI Overnight	7929.00	– 91.00	– 1.13%
S&P ASX 200	7843.40	– 138.60	– 1.74%
S&P500	5611.85	+ 30.91	0.55%
Nasdaq Comp	17299.29	– 23.70	– 0.14%
DJIA	42001.76	+ 417.86	1.00%
S&P500 VIX	22.28	+ 0.63	2.91%
US 10-year yield	4.25	– 0.01	– 0.21%
USD Index	103.71	– 0.23	– 0.22%
FTSE100	8582.81	– 76.04	– 0.88%
DAX30	22163.49	– 298.03	– 1.33%

Good Morning,

Technical buying allowed US markets to rally into the close ahead of April 2 tariff announcements.

What happened overnight

US markets fell sharply at the open and then waged a recovery rally to mark month and quarter end. The S&P500 rose 0.6% and Dow Jones Industrial Average finished 1.0% higher closing at or near highs for the session. The Nasdaq Composite, down -0.1%, also staged a rebound after trading down as much as -2.7% at its low, but still settled slightly below Friday’s close.

The initial decline in equities reflected some hesitation about Wednesday’s implementation of reciprocal tariffs. Headlines over the weekend impacted investors’ sentiment after reports the Trump administration is considering broader tariffs on April 2, including a 20% universal tariff on all imports from all countries.

The 10-yr yield finished down -1bps at 4.25% after hitting 4.19% earlier when equities markets were falling. The 2-yr yield closed unchanged at 3.91% after hitting 3.85%.

Many stocks participated in the recovery, leading the equal weighted S&P500 to close 0.8% higher. Mega cap shares were largely left out of the tactical rally. Nvidia, Microsoft, Amazon and Tesla all ended down on the day by -1.2%, -0.9%, -1.3%, and -1.7%, respectively. 

Tesla shares fell -36% over the first quarter, the biggest decline since 2022 and the third-biggest sell off for any quarter on record. 

The remaining ten sectors registered gains led by consumer staples, up 1.6% and financials lifting 1.3%. Capping off the March quarter, US markets finished on a positive note but the quarter as a whole has proved a challenging period.

The S&P500 lost -4.6% over the first three months, while the DJIA retreated by -2.3% and the Nasdaq, previously the outperformer, is down -10.4%.

1Q 2025 US Index Performance

-Dow Jones Industrial Average: -2.3% 
-S&P 500: -4.6% 
-S&P Midcap 400: -6.5% 
-Russell 2000: -9.8% 
-Nasdaq Composite: -10.4% 

In Europe, the Euro Stoxx50 fell -1.6% and FTSE100 fell -0.9%. Oil rallied, with WTI increasing 3.5% to US$71.5/bbl while gold rose 0.3% to US$3,121.1/oz. amidst a risk-off tone across markets.

Stock markets are sending a message, extract ANZ Australian Morning Focus

Ahead of the announcement of the US trade review and reciprocal tariffs this week, risk markets remained under pressure. Stock markets are sending a very clear message that tariffs are not good for corporate profits which potentially can have knock-on effects for all aspects of economic activity, not least of which is hiring. 

This week will bring the latest US labour market data including end-February job openings and the March ADP private hiring and national labour market report. It is too early for the DOGE driven reduction in federal employment to show up in the unemployment data, but the momentum in public and private hiring and demand for labour will be instructive. 

The 3month average of NFPs (non-farm payrolls) is currently 200k. If hiring is in line with expectations (139k), the 3month average will drop to 138k. That would confirm a material slowing in the jobs market from 4Q 2024 3onth NFP average of 209k. 

In the first two months of 2025, nominal personal spending has slowed to 0.05% month-on-month on average from 0.43% month-on-month in 4Q. In real terms it fell -0.25% month-on-month on average in Jan/Feb. 

The Atlanta Fed’s GDPNow is flashing GDP growth contracted at a -2.8% seasonally adjusted annual rate pace in Q1, with both weak consumption growth and the front loading of imports subtracting from GDP. What will be important to watch in the Q1 GDP data will be real final sales.

RBA to remain on Hold and presser: Extract from National Australia Bank

The RBA is widely expected to keep rates on hold in April as it waits further information on inflation (Q1 CPI April 30) and on wages growth (WPI May 14). 

Note the next RBA meeting is not until May 19-20 where markets are around 80% priced for a cut. The recent RBA Minutes noted that when the Board decided to cut rates in February, the observations and judgements they applied were that inflation had come in lower than expected, the Board gave greater weight to potential downside risks, and judged the labour market might not be as tight as previously thought. 

Going forward those judgements put a hefty premium on realised wage data (to confirm the labour market is not as tight as embodied in the central projection), and on realised inflation data (to ensure upside risks to inflation continue to abate). NAB sees the RBA cutting rates again in May. Our call thereafter is for three further rate cuts taking the cash rate to 3.1% by February 2026.

Extreme fear but is it time to be greedy: Extract from GF Asset Management

It’s pretty gloomy out there. Especially in the U.S. The post election rally in risky assets has now completely fizzled. Volatility has increased and safe havens such as Gold are well sought after. Now, we head into ‘Liberation day’ on April 2nd, a pivotal day for the Administration’s tariff implementation. Could this be the catalyst for the market to turn? 

In Trump’s first term, investors were accustomed to a ‘Trump put’. After a market wobble, Trump would ease fears – then it was as it related to his trade war with China. Surprisingly in Trump 2.0, we have yet to see the President or his team or his Treasury Secretary try to calm the recent draw-down. Indeed, they have only doubled down. 

These past months the U.S. posted a historic trade deficit. January saw a US$131.4 billion deficit vs an average of US$50 billion for the past 25 years. Clearly, corporate America are getting in front of the price hikes as things like steel, autos and auto parts will see hikes of up to 25% from next month. 

Further, we have not seen this level of Fiscal parsimony in decades. US$1 trillion to be cut in just 130 days is the aim of the Administration. Talk about going cold-Turkey. Few would argue it’s not urgently needed but the goal of cutting 15% so rapidly from Government spending is rattling markets. As argued before we believe that this transition from the public to private sector led economy will ultimately be decisively positive but the short-term outlook remains difficult. 

It’s not all bad news. In our opinion, we are nearing peak policy uncertainty. The new Administration has clearly hit the ground running on both trade and spending and we believe we are getting close to the Trump ‘put’ as the transmission of weak financial markets into the economy will come and will be a nasty distraction to this Administration.

More importantly, the Fed took a dovish tilt at their meeting in March and in post FOMC appearances, dramatically slowing the pace of their balance sheet reduction by US$20 billion per month – a very welcome relative boost to money supply.

Corporate news in Australia

-Downer EDI ((DOW)) wins a NZ$600m Powerco contract for maintenance and repairs.

-The RBA and ASIC are reviewing the ASX ((ASX)) CHESS failure.

-Opthea ((OPT)) starts funding talks after a second trial failure for its eye disease treatment.

-Anacacia Capital is selling its stake in Force Fire to Southern Cross Electrical Engineering ((SXE)) for $53.5m.

On the calendar today:

-AU Feb Retail sales

-AU RBA Cash rate

-JP Feb Unemployment

-US Feb JOLTS

-US March ISM Manufacturing

-PREDICTIVE DISCOVERY LIMITED ((PDI)) Qtrly Prod’n

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

Spot Metals,Minerals & Energy Futures
Gold (oz)	3126.80	+ 28.14	0.91%
Silver (oz)	34.98	– 0.34	– 0.96%
Copper (lb)	5.15	+ 0.04	0.69%
Aluminium (lb)	1.15	– 0.00	– 0.43%
Nickel (lb)	7.27	+ 0.09	1.23%
Zinc (lb)	1.29	– 0.02	– 1.46%
West Texas Crude	69.36	– 0.57	– 0.82%
Brent Crude	72.76	– 0.59	– 0.80%
Iron Ore (t)	102.43	+ 0.07	0.07%

The Australian share market over the past thirty days

Index	31 Mar 2025	Week To Date	Month To Date (Mar)	Quarter To Date (Jan-Mar)	Year To Date (2025)
S&P ASX 200 (ex-div)	7843.40	-1.74%	-4.03%	-3.87%	-3.87%

BROKER RECOMMENDATION CHANGES PAST THREE TRADING DAYS
NST	Northern Star Resources	Upgrade to Buy from Hold	Bell Potter
PDN	Paladin Energy	Upgrade to Outperform from Neutral	Macquarie
PNR	Pantoro	Downgrade to Sell from Hold	Bell Potter
TRS	Reject Shop	Downgrade to Hold 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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