Morning Wrap: ASX 200 to tumble, S&P 500 sinks despite early rally, Trump to hit China with 104% tariff

ASX 200 futures are down 142pts (-1.92%) as of 8:30 am AEST.

In a nutshell:

• US markets briefly rallied in early trade but aggressive faded into negative territory

• The key catalyst was Trump announcing 104% tariffs on China (initial 20%, Liberation Day 34% plus recent 50%)

• The market is in bad shape as the VIX soars above 50%, bond yields jump and safe-havens like gold sell off

Let's dive in.

S&P 500 SESSION CHART

S&P 500 faded a strong start to close at worst levels (Source: TradingView)

OVERNIGHT MARKETS

• US stocks broadly lower, faded a strong start to finish near worst levels: S&P 500 (-1.57%), Nasdaq (-2.15%), Dow (-0.84%), Russell 2000 (-2.73%)

• The session marked one of the largest intraday reversals on record, with the S&P 500 trading up as much as 4.0%, only to close 1.5% lower

• Commodities broadly lower, notably Brent crude down 4.2% to US$61.5 a barrel or the lowest since April 2021

• Initial bounce largely driven a mix of oversold conditions and a positive shift in tariff messaging from the White House, with Bessent saying 70 countries have reached out for negotiations and Trump suggesting tariff end game is coming

• Markets faded after the White House said 104% additional tariffs (initial 20%, Liberation Day’s 34% plus recent 50% threat) to go into effect on Thursday after China failed to remove its 34% retaliatory duties (CNBC)

• Notional net selling has been the largest in 15 months and the second largest in the past decade, according to Goldman Sachs

• Investors lost ~$26bn in leveraged ETFs last week (FT)

• Offshore yuan falls to lowest level on record after PBOC sets reference rate at weakest since September (BBG)

• China's state-backed funds are planning to buy local stocks to support the market as US trade war escalates (BBG)

• US selloff will worsen before a buying opportunity emerges (BBG)

• Sell-side analysts downgraded broad range of stocks including Starbucks, Caterpillar and Goldman Sachs amid trade war (BBG)

STOCKS

• Apple exported more than US$17bn in iPhones from India last year (BBG)

• Apple customers dash to buy iPhones ahead of tariffs (BBG)

• Broadcom announces US$10bn buyback after latest stock rout (RT)

• Wall Street traders expected to report best quarter in more than a decade amid market volatility, offset by poor M&A volumes (FT )

• Levi Strauss expresses uncertainty about impact of tariffs on FY25 but still reiterated revenue and profit guidance (RT)

CENTRAL BANKS

• Fed's Goolsbee says Trump's larger-than-expected tariffs pose inflation risks (RT)

• ECB to cut rates at next four meetings due to US tariffs (Bloomberg)

• BOE Deputy Governor Clare Lombardelli warns that US tariffs will "depress" UK growth (BBG)

TARIFFS

• US forges ahead with 104% tariffs on China as well as dozens of other country-specific levies (RT)

• Treasury Secretary Bessent says trade negotiations had "nothing to do with the market" (AX)

• Mexican President Sheinbaum says auto executives with plants in Mexico have no set plans to move factories (RT)

• European Commission President Ursula von der Leyen urged China to ensure a negotiated solution to tariffs (RT)

• Bessent says over 70 countries reached out to the White House for negotiations, says China’s decision to retaliate was a big mistake (CNBC)

ECONOMY

• US consumer credit unexpectedly fell in February, with total credit falling nearly $810 million, marking the first drop in three months (BBG)

• China 2025 GDP growth forecasts jumped to 4.6%, now overshadowed by Trump tariffs (NK)

• Australian consumer confidence slammed by tariff turmoil, the Index slid 6.0%to 90.1 in April from March, still higher than a year ago but pessimists continued to outnumber optimists (RT)

ASX TODAY

• GQG Partners announces March FUM of $161.9bn, up 0.8% from the previous month (GQG)

• IperionX commences Titan Critical Minerals Project definitive feasibility study, partly funded by recent US government award (IPX)

WHAT TO WATCH TODAY

• We rallied too much yesterday: The market bounced strongly on Tuesday, with strong intraday price action and closing at best levels (+2.27%). Everything from CBA (opened +1.46%, closed +2.80%) to Pro Medicus (opened +2.8%, closed +6.3%) managed to catch a bid.

• Tariff war intensifies: Trump has imposed an additional 50% on China after they failed to remove their retaliatory tariffs. The big question here is if China will hit the US back with another 50%.

• Bearish signs: The sheer magnitude of the overnight fade as well as S&P 500 VIX pushing back above 50, bond yields soaring (likely due to China dumping treasuries), gold weakening (likely market participants selling liquid assets to raise cash) are all a bad look for equities.

• Gap down: Given most of the negative catalysts happened over the course of the US session, we're likely to experience a sharp gap down. It will be interesting to see if the market continues experience selling pressure or if we just chop around the gap down levels.

BROKER MOVES

• Ansell downgraded to Neutral from Outperform; target cut to $31.05 from $40.30 (MQG)

• Fortescue upgraded to Neutral from Sell but target cut to $15.30 from $16.20 (GS)

• Fortescue upgraded to Overweight from Equal-weight but target cut to $16.60 from $18.15 (MS)

• Coronado downgraded to Neutral from Buy; target cut to $0.35 from $1.05 (GS)

• Deterra Royalties downgraded to Neutral from Buy; target cut to $3.60 from $4.70 (GS)

• Evolution Mining downgraded to Underweight from Equal-weight; target cut to $5.55 from $5.95 (MS)

• IGO upgraded to Equal-weight from Underweight but target cut to $3.50 from $3.85 (MS)

• MinRes downgraded to Sell from Neutral; target cut to $18 from $30 (GS)

• Northern Star upgraded to Overweight from Equal-weight; target up to $20.50 from $18.40 (MS)

• Nickel Industries downgraded to Equal-weight from Overweight; target cut to $0.55 from $1.00 (MS)

• Rio Tinto downgraded to Equal-weight from Overweight; target cut to $115.50 from $125 (MS)

• Sandfire Resources upgraded to Buy from Neutral but target cut to $10.20 from $10.40 (GS)

• Whitehaven downgraded to Neutral from Buy; target cut to $5.70 from $9.20 (GS)

Stocks trading ex-dividend: 

• Wed 9 Apr: Clover Corporation (CLV) – $0.007, Turners Automotive (TRA) – $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: BlackWall (BWF), Perseus Mining (PRU)

• Listing: None 

• Earnings: None

• AGMs: Scentre Group (SCG)

Economic calendar (AEST):

• 2:30 pm: Reserve Bank of India Decision (ests 25 bp cut)

• 3:00 pm: Japan Consumer Confidence (MAR)

• 4:00 am: FOMC Minutes