The Australian sharemarket is preparing for a volatile start following the White House’s decision to escalate its trade agenda. Universal tariffs have been raised to 15 per cent in response to the US Supreme Court, leaving investors uncertain about the next developments in the global trade situation. Futures on the S&P/ASX 200 had indicated a small gain, but those projections shifted after the president invoked Section 122 of the Trade Act to impose the new levies.
Australia, along with other nations previously facing a 10 per cent tax on exports to the US, will see that rate jump to 15 per cent. According to Ray Attrill from National Australia Bank, this is “unequivocally negative news as far as Australia and probably the Aussie dollar are concerned.” The Australian dollar, which recently hit a three-year high, now faces headwinds. The trade escalation also threatens to derail US-EU trade talks, potentially leading to a broader global trade conflict.
Amidst the trade tensions, the Australian reporting season enters its final week. Jason Steed, equity strategist at JPMorgan, noted increased volatility in company share prices this month, with even minor surprises in results triggering significant reactions from investors. Key companies reporting include Ampol, Lendlease, and NIB. Adding to market unease is the situation in the Middle East, where rising tensions have pushed oil prices higher.
Analysts are also awaiting the release of January’s consumer price index data, which is expected to show headline inflation slowing slightly to 3.7 per cent. The Reserve Bank of Australia (RBA) recently raised interest rates for the first time in over two years, and RBA governor Michele Bullock is scheduled to speak in Melbourne on Wednesday evening. Traders anticipate further rate hikes in the coming months, reflecting ongoing concerns about inflation.
