Morning Wrap: ASX 200 set to dive 4%, Nasdaq enters bear market, Aussie dollar plunges

ASX 200 futures are down 331pts (-4.48%) as of 8:30 am AEDT.

In a nutshell:

• S&P 500 logged its worst two-day session since March 2020, Nasdaq entered into a bear-market (down 22% from Feb-25 peak)

• Commodities broadly smashed, with copper down 8.7% and oil down 5.5% on Friday. Even gold faced a 2.4% selloff despite its safe haven status

• The Australian dollar is currently trading at 59.8 US cents, the lowest since March 2020

Let's dive in.

S&P 500 SESSION CHART

S&P 500 lower, finished off worst levels (Source: TradingView)

OVERNIGHT MARKETS

• US stocks continued to nosedive, and closed at worst levels

• US weekly recap: Nasdaq (-10.02%), Russell 2000 (-9.7%), S&P 500 (-9.08%), Dow (-7.86%)

• Markets crushed by a second consecutive day of trade escalation, with China announcing (late Friday night) a 34% tariff on all US imports while Trump stressed his “policies will never change”

• Price action was extremely heavy, with the S&P 500 opening 1.93% lower and closed down 5.97% 

• Nasdaq has entered bear-market territory, down 22% from February all-time highs 

• Russell 2000 also enters bear market, down 25% from late-November 2024 high

• S&P 500 logged its worst two-day session since March 2020 and on the verge of a bear market, down 17.4% from Feb highs

• VIX spikes to 45, the highest level since August 2024 (unwinding of the yen carry trade). But Aug-24 move peaked at 65 (while covid VIX peak was 85)

• Fed response was another driver of uncertainty, Powell stressed over the weekend that the Fed is in no hurry to cut rates

• EvercoreISI latest investment firm to cut its 2025 S&P target (BBG)

• JPMorgan hikes global recession odds to 60% from 40% (RT)

• US junk bond yield spread widens by most since Mar-2020 (BBG)

• Goldman Sachs lowers oil forecasts, citing risks of higher OPEC+ supply and global trade war triggering a recession (RT)

• Global commodities slump by most since 2022 as US tariffs spark speculation about slowing global economy (BBG)

CENTRAL BANKS

• Fed Chair Powell says tariffs could have a persistent impact on inflation and current progress has slowed (FED)

• Fed Governor Cook anticipates weaker growth and upside inflation risks, reinforcing case for patience (BBG)

• Central banks in Asia are expected to respond with more rate cuts to counter Trump-tariff slowdown (BBG)

• RBNZ set to cut rates this week and flag further easing (RT)

TRADE WAR

• China hits back at Trump with 34% tariff on all imports from US (BBG)

• White House officials stress there will be no last-minute relief from  reciprocal tariff roll out (AX)

• Commerce Secretary Lutnick says tariffs will not be postponed, going to stay in place "for days and weeks" (CBS)

• Trump economic advisor Hassett says 50 countries have reached out to negotiate on tariffs (ABC)

• Trump says TikTok deal very close, repeats willingness for tariff relief in exchange for Tiktok sale approval (FT)

• Trump open to talks if he receives "phenomenal" offers (BBG)

• UK's Starmer says "I’ll shelter British business from storm of Trump’s trade war" (TG)

• Taiwan's president proposes zero tariffs as basis for US trade talks, won't retaliate against US, will buy more from the US (RT)

• Trump says Vietnam is willing to cut tariffs down to zero if they are able to make an agreement with the US (BBG)

• India looking to build on past negotiations, plans no retaliation (BBG)

• Indonesia's economic minister says no retaliation, will send high-level delegation to the US (RT)

• Canada hits US autos with retaliatory 25% tariffs (BBG)

• France President Macron urges EU businesses to halt spending on the US (BBG)

ECONOMY

• US March nonfarm payrolls increased 228,000 in a broad advance, vs. 130,000 consensus, unemployment rate ticked slightly higher to 4.2% from 4.1% (BBG)

• Dallas Fed estimates Trump tariffs would cut 1.5% from economic growth in Texas, potentially eliminate about 100,000 jobs (BBG)

• Australian household spending rose 0.2% in January vs. 0.3% ests, consumers continued to spend less on non-discretionary goods and services despite RBA rate cut (BBG)

ASX TODAY

• ARB Corp provides US tariff update, says it does not anticipate material impact to FY25 results (ARB)

• James Hardie Chair Anne Lloyd to meet with investors following heavily criticised acquisition of Azek (AFR)

• Lotus signs further binding uranium offtake agreement for 600,000lbs over 2026-29 (LOT)

WHAT TO WATCH TODAY

• Massive gap down: The market is set for a massive gap down (ASX 200 futures -4.4%). Overnight trading reflected sheer panic, as stocks opened sharply lower and continued to slide throughout the session. It will be interesting to see if our gap down prices in most of the downside, or will investors seek to liquidate positions and drive prices down even lower. To add some perspective, most of the Mar-2020 and Oct-Nov 2008 selloffs were around 4-8%.

• Hard hit sectors: Copper Miners (-10.2%), Gold Miners (-8.8%) and Rare Earths/Strategic Metals (-7.7%) were the most hard hit sectors on our overnight ETF watchlist. Commodities broadly sold off, with Copper dropping 8.7% and Brent crude falling 5.5% on Friday. The two commodities are both down this morning, with copper down an additional 5.3% and Brent crude slipping 3.6% (at the time of writing).

• Where to from here: It's the million dollar question. Firstly, volatility is high (VIX closed session highs of 45). Looking back, the ASX 200 fell as much as 38% between 20-Feb-20 and 23-Mar-20. But during this period, it also logged two rallies of 3.1% and 5.8% on 10-Mar and 17-Mar respectively. Given the sheer magnitude of the selloff, indicators (e.g. Fear & Green Index, reset market valuations, AAII sentiment, RSIs etc.) point to a potential oversold rebound. However, recession risks are rising and Trump is showing no signs of backing down from last week's tariffs. China’s retaliatory 34% tariff on Friday night has only escalated global trade tensions. The economic damage, overhang and fund flow out of the US point to further pain ahead.

BROKER MOVES

• Ampol downgraded to Neutral from Outperform; target cut to $23.70 from $28 (MQG)

• Viva Energy downgraded to Neutral from Outperform; target cut to $1.70 from $2.80 (MQG)

Stocks trading ex-dividend: 

• Mon 7 Apr: Duxton Water (D2O) – $0.037, Gowing Bros (GOW) – $0.03, Shine Justice (SHJ) – $0.015

• Tue 8 Apr: Brickworks (BKW) – $0.25

• Wed 9 Apr: Clover Corporation (CLV) – $0.007

• Thu 10 Apr: Cadence Capital (CDM) – $0.03, Cadence Opportunities Fund (CDO) – $0.065, Cosol (COS) – $0.01

• Fri 11 Apr: WAM Leaders (WLE) – $0.047

Other ASX corporate actions today: 

• Dividends paid: Integral Diagnostics (IDX), Ventia Services (VNT)

• Listing: None 

• Earnings: None

• AGMs: None

Economic calendar (AEDT):

• 5:00 pm: Germany Balance of Trade (FEB)