Morning Wrap: ASX 200 to tumble, S&P 500 and Nasdaq tumble as Trump commits to sweeping tariffs

ASX 200 futures are down 101pts (-1.20%) as of 8:30 am AEDT.

In a nutshell:

• US stocks were trending higher until Trump announced tariffs on Canada, Mexico and China

• The three countries are the largest trading partners with the US and analysts expect the tariffs to push up domestic prices and reduce household income

• Healthcare stocks set to sell off on Monday amid tariff concerns, overseas listed ResMed and Fisher & Paykel shares down ~8%

Let's dive in.

S&P 500 SESSION CHART

S&P 500 was trending higher until Trump ordered sweeping tariffs (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks lower, finished at worst levels after early strength

• S&P 500 up as much as 0.82% before closing 0.51% lower

• US weekly recap: Dow (+0.27%), Russell 2000 (-0.87%), S&P 500 (-1.00%), Nasdaq (-1.64%)

• US monthly recap: Nasdaq (+1.64%), Russell 2000 (+2.58%), S&P 500 (+2.70%), Dow (+4.70%)

• Today’s big story: Trump announced tariffs on Mexico and Canada (25% duties though 10% on Canadian energy) plus 10% on China

• Countries are the three largest trading partners of the US and the move could raise prices of food, autos and consumer goods (CNBC)

• Tariffed countries have all pledged to respond; China said it would take “corresponding countermeasures”, Canada imposed 25% tariffs on a wide range of US exports (RT)

• Mag 7 stocks set to lag this year, suggesting investors buy cheap international stocks, says BofA's Hartnett (BBG)

• Global equity funds draw biggest weekly inflow in five weeks, driven by a record rally in European shares (RT)

STOCKS

• Atlassian (+14.9%) Q2 earnings beat against high bar, increased FY25 guidance more than expected, strong cloud and data centre performance, record number of high-value ACV deals (RT)

• Apple (-0.6%) 1Q25 EPS beat, with gross margins 40 bps above estimates, iPhone revenue missed by ~2%, Mac and iPad outperformed, China a key area of weakness with sales down 11%, iPhone 16 demand stronger in markets where Apple Intelligence is available, March quarter revenue growth at  low-to-mid single digits (BBG)

• Samsung guidance subdued amid weak outlook for AI chips (FT)

CENTRAL BANKS

• Major central banks are cutting while Fed moves to the sidelines; policy divergence could mean an even stronger dollar (RT)

• ECB rate cut fuels expectations for further easing amid weak growth (RT)

• RBA rate cut in February, according to majority of economists (BBG)

TRUMP

• China, Mexico and Canada are the three largest trading partners with the US, supplying US$536bn, $455bn and $437bn of goods respectively, to the US in 2022, according to the Office of the US Trade Representative 

• US household income after taxes could fall by ~1% in 2026 due to the 25% tariff on Canada and Mexico, according to the Tax Policy Centre

• Tariffs could raise approximately US$1.3tn in revenue through 2035, offset by the cost of tax cuts, which could cost more than US$5tn over 10 years (CNBC)

ECONOMY

• US December core PCE up 0.2% MoM, in-line with consensus and up 2.6% year-on-year, also as expected though higher than November’s 2.4% (RT)

• UK business confidence dips in January, but trading prospects show resilience (RT)

• Tokyo core inflation rises to highest since Feb-2024 (BBG)

ASX TODAY

• AMA Group holder Thorney raises stake to 14.88% from 11.53% (AMA)

• Austal shares under institutional accumulation, with buyers thinking the 

• company will benefit from Trump’s return to power (AFR)

• Austin Engineering notes US tariffs, says business is shielded from impacts after recent repositioning of US business (ANG)

• Fisher & Paykel continues to expect to reach 65% gross margins, does not currently anticipate a material impact from the announced tariffs on NPAT for FY25, but costs likely to increase in FY26 (FPH)

• Myer holder Perpetual increases holding to 10.46% from 8.54% (MYR)

• SelfWealth potentially in the midst of a bidding war after Singaporean investment platform Syfe discloses 19.99% holding, leaving it in a position to launch a bid to compete with Bell Financial’s current offer (SWF)

WHAT TO WATCH TODAY

• Here comes a heavy session: Expect broad-based weakness after the Trump tariffs. Most of the overnight ETFs above finished 1-3% lower, led by sub-sectors like copper miners, energy and homebuilders

• Healthcare: Healthcare names like ResMed, Fisher & Paykel etc. have manufacturing facilities from the tariffed countries. US-listed ResMed ADRs finished the session down 8.3%, while NXZ-listed FPH shares are currently down 8.2%.

• Gold: Gold prices briefly spiked to a record US$2,817 overnight but finished the session around breakeven at US$2,797. While gold is considered a safe haven, it still faces challenges in times of extreme uncertainty.

BROKER MOVES

• Bluescope Steel upgraded to Buy from Neutral; target up to $24 from $21 (CITI)

• PointsBet downgraded to Overweight from Buy; target cut to $0.95 from $1.00 (JARD)

• ResMed upgraded to Buy from Neutral; target up to US$290 from US$255 (UBS)

• Zip upgraded to Buy from Neutral; but target cut to $3 from $3.30 (CITI)

Stocks trading ex-dividend: 

• Mon 3 Feb: Australian Foundation Investment Company (AFI) – $0.12, BKI Investment Company (BKI) – $0.039, Pengana Global Private Credit Trust (PCX) – $0.012

• Tue 4 Feb: Amcil (AMH) – $0.01

• Wed 5 Feb: None

• Thu 6 Feb: Midway (MWY) – 31.43%

• Fri 7 Feb: None

Other ASX corporate actions today: 

• Dividends paid: None

• Listing: None

• Earnings: Centuria Office REIT (COF)

• AGMs: None

Economic calendar (AEDT):

• 10:30 pm: Australia Retail Sales (Dec)

• 11:45 pm: China Caixin Manufacturing PMI (Jan)

• 8:00 pm: Eurozone Inflation Rate (Jan)

• 1:00 am: US ISM Manufacturing PMI (Jan)