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Morning Research Notes - 03.02.25
Wall Street closed lower on Friday, as confirmation of tariffs on key American trade partners spooked investors. Iron ore traded flat at $US101.60 per tonne. Brent crude declined by 1.5% to $US76.80 a barrel, as spot gold increased by 0.2% to $US2,801.20 per ounce
U.S. markets closed lower on Friday in a sharp reversal, as confirmation from the White House that tariffs on Mexico, Canada, and China would take effect on Saturday rattled investors. The Dow Jones fell 337 points or 0.8%, the S&P 500 dropped 0.5%, and the Nasdaq lost 0.3% after earlier gains. The tariffs—25% on Mexican and Canadian goods (barring 10% on Energy) and 10% on Chinese imports—caught markets off guard, despite earlier hopes they would be delayed. Meanwhile, PCE inflation, the Fed’s preferred measure, accelerated to 2.6% annually, with core inflation at 2.8%, reinforcing concerns over pricing pressures. In earnings, Apple erased early gains despite issuing a positive sales outlook, Exxon Mobil beat profit estimates but declined 2.5%, and Colgate-Palmolive fell 4.6% on weaker revenue. However, AbbVie surged nearly 5% after projecting strong 2025 earnings, supported by its newer immunology drugs. With economic uncertainty rising, investors remain cautious about the impact of tariffs and inflation on future Fed policy.
The Australian stock market closed higher on Friday, with the ASX 200 rising by 0.45%. Major sectors, including Materials, Financials, Info Tech and Utilities, ended the day in the green. Commodities experienced a weak session, with Zinc, Nickel, Copper and Aluminium all closing lower, falling by 1.63%, 1.02%, 0.28% and 0.73%, respectively.
Chart of the day
The global trade landscape is at a potential inflection point, as highlighted by historical trends in world exports and U.S. tariff rates. The chart illustrates the significant rise in global exports as a percentage of GDP since the mid-20th century, driven by increasing globalisation and economic integration. However, with the U.S. imposing its highest tariffs in decades—ranging from 10% to 25% on key trading partners—there is concern that these protectionist measures could reverse some of these trade gains. Historically, periods of high tariffs have coincided with lower trade activity, as seen in the late 19th and early 20th centuries. While current tariffs remain low compared to historical peaks, further escalation could slow global trade growth, affecting both businesses and investors.
Source: Livewire, Coolabah Capital
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