Morning Wrap: ASX 200 to tumble, S&P 500 suffers second worst day of the year

ASX 200 futures are down 91pts (-1.14%) as of 8:30 am AEDT.

In a nutshell: 

• Major US benchmarks tumbled, with the S&P 500 recording its second-worst day of the year

• Markets remain in risk-off mode on tariff worries, pick-up in US consumer inflation expectations and poor guidance from Lululemon, KB Home

• Utilities, Real Estate and other defensive sectors outperformed on a relative basis, which historically is not healthy leadership for the market

Let's dive in.

S&P 500 SESSION CHART

S&P 500 trended lower to finish at worst levels (Source: TradingView)

OVERNIGHT MARKETS

• Major US benchmarks were sharply lower, with stocks closing near worst levels

• Markets remain in risk-off mode on tariff, inflation and growth fears, Trump’s 2-Apr reciprocal tariffs remain a major overhang 

• US weekly recap: Nasdaq (-2.59%), Russell 2000 (-1.64%), S&P 500 (-1.53%), Dow (-0.96%) 

• S&P 500 posted its second-worst day of the year, Nasdaq fourth-worst and both down for a fifth week in the past six

• Bullish focus points for the week – Trump said 2-Apr reciprocal tariffs will be “very lenient”, EU preparing concessions to secure partial relief from US tariffs, still solid economic data, service sector outperforming globally, pickup in M&A activity, clearly positioning after recent drawdown

• Bearish focus points for the week – Trump announced additional 25% tariffs on all cars not made in the US and warned of higher tariffs, uncertainty in tariff spillover to underlying economy, consumer sentiment at lowest levels since November 2022 and forward inflation expectations jump, downbeat outlook from Lululemon and KB Home, dip buying seemingly exhausted as US equities saw biggest weekly outflow of the year (-US$30.2bn)

• Value stocks experiencing an unusual surge of momentum despite this year's stock market decline (BBG)

STOCKS

• Top chipmakers slowing pace of expansion in Japan and Malaysia amid tariff uncertainty, soft demand for older chips (NK)

• Large cloud customers are slowing AI spend as DeepSeek drives down prices (TI)

• Lululemon shares crater more than 14% after downgrading its 2025 guidance, company said consumers are spending less due to economic and inflation concerns (CNBC)

• US department stores Macy's, Kohl's close bricks-and-mortar stores as they struggle to remain relevant (YH)

• CoreWeave downsizes US IPO to 37.5m shares or 23.5% less than originally planned; investors concerned over company's reliance on Microsoft and capital intensity (RT)

CENTRAL BANKS

• Boston Fed's Collins says inevitable that tariffs will raise inflation, making it appropriate to keep rates steady (BBG)

• Goldman Sachs brings forward RBA rate cut call from April to May (BBG)

TARIFF & GEOPOLITICS

• President Trump is privately telling aides to be more aggressive on tariff policy ahead of 2-Apr key deadline (WP)

• Auto tariffs expected to push up demand for used cars, pressuring working-class consumers (RT)

• EU weighs targeting US services exports, including Big Tech operations in Europe (FT)

• Tariffs upend global auto industry, a major blow to Asian autos and German luxury brands (FT)

• Japan PM Ishiba weighs policy support measures amid concerns Trump's tariffs will have significant economic impact (BBG)

• Australian PM Albanese announces federal election to be held on 3 May, polls show tight race (BBG)

ECONOMY

• US February core PCE up 0.4% month-on-month vs. expectations for a 0.3% increase (RT)

• US March Michigan consumer sentiment falls to 57 vs. 57.9 ests, one-year inflation expectations came in at 5.0% vs. 3.9% in February (RT)

• French and Spanish inflation both cooler-than-expected in March, down to 0.8% and 2.3% year-on-year respectively, supporting calls for ECB rate cuts (BBG)

• China's finance ministry will inject US$69bn into four state banks in effort to beef up capital buffers (BBG)

ASX TODAY

• Accent Group’s major shareholder Frasers Group to increase shareholding to 19.99% vs. prior 14.65%, Frasers seeking to leverage Accent to help expand its brand Sports Direct in Australia (AFR)

• ASX faces ASIC and RBA investigation after settlement system failure in December (AFR)

• Southern Cross Electrical acquires Force Fire holdings for up to $53.5m, funded via cash reserves, transaction to be at least 18% EPS accretion on FY25 (SXE)

• Woolworths facing pressure from New Zealand government to potentially break up or restructuring its supermarket chains (NZ)

WHAT TO WATCH TODAY

• Broad-based weakness: This is one of those days where almost everything gets smashed. Tech, discretionary and materials are poised to lead to the downside.

• Gold, Defensive outperformance: Gold spot rallied 0.9% to a record US$3,084 an ounce overnight. But broader market weakness meant that gold miners struggled to keep up, with the VanEck Gold Miners ETF down 0.4%. Defensive sectors like Utilities, Real Estate and Health Care outperformed on a relative basis.

• Where are we now: If I had to summarise the market in one sentence right now – A sharp downward move renders us too late to sell, but too early to buy the dip. The market has yet to undercut the low from 13-Mar but failure to hold the oversold bounce a bearish look. There are plenty of negative overhangs like 2-Apr reciprocal tariffs, corporate guidance downgrades, local elections, rising inflation risks/expectations etc.

BROKER MOVES

• Northern Star Resources upgraded to Buy from Hold; target up to $22.15 from $20 (BP)

• Pantoro downgraded to Sell from Hold but target up to $0.14 from $0.115 (BP)

Stocks trading ex-dividend: 

• Mon 31 Mar: Cedar Woods Properties (CWP) – $0.10, MA Credit Income Trust (MA1) – $0.015, Metrics Income Opportunities Trust (MOT) – $0.013, Metrics Master Income Trust (MXT) – $0.013, Metrics Real Estate Multi-Strategy Fund (MRE) – $0.008, Ramsay Health Care (RHCPA) – $3.316, Staude Capital Global Value Fund (GVF) – $0.033.

• Tue 1 Apr: Pengana Global Private Credit Trust (PCX) – $0.012

• Wed 2 Apr: ARB Corporation (ARB) – $0.34, Harvey Norman (HVN) – $0.12.

• Thu 3 Apr: Lindsay Australia (LAU) – $0.023, Ridley Corporation (RIC) – $0.048

• Fri 4 Apr: FFI Holdings (FFI) – $0.10

Other ASX corporate actions today: 

• Dividends paid: Beach Energy (BPT), Bendigo and Adelaide Bank (BEN), Data3 (DTL), Echelon Resources (ECH), Gold Road Resources (GOR), IRESS (IRE), Karoon Energy (KAR), NZME (NZM), and Viva Energy Group (VEA)

• Listing: None

• Earnings: None

• AGMs: None

Economic calendar (AEDT):

• 12:30 pm: China NBS Manufacturing and Services PMI (MAR)

• 11:00 pm: Germany Inflation (MAR)