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The end of another week – one which has been a bit of a shitshow. The good news is we’re not in a correction in the Oxford sense of the term.
An upward bump in iron ore prices on the Singapore benchmark on Friday to US$103/tn helped the ASX200 narrowly avoid a technical correction in Week 11.
But if it walks like a duck, and looks like a duck, well.
How long ‘til fatigue?
Perhaps the big thing to note is we were at 8,500pts on the XJO not that long ago.
Such lofty heights now appear out of reach for a while, and it is the love-him-or-hate-him Donald Trump at the head of this fall, given intense market uncertainty driven by tariff talks.
Eventually, the market will get tired of these headlines, and they’ll stop proving to be macro catalysts. But in the early days of this Trump 2.0 administration, that fatigue could take quite a while to build up.
Politically at home, Peter Dutton’s renewed focus of late on insurance companies might find some traction after reports the price of flood insurance in parts of QLD has tripled, right after devastating floods.
WA Labor won that state’s election, surprising nobody, but whether or not that spells an ALP victory at the Federal level remains to be seen. WA has hardly any of the national population, after all (though far more than Darwin, at least.)
Turning to tariffs
Let’s get back to tariffs.
If you’re finding it hard to keep up, don’t worry, you’re not alone. In fact, the most recent release of the Beige Book from the USA – a nationwide report that comes out eight times a year from all Federal Reserve state banks in the US – used the word “uncertainty” around 45 times.
So don’t feel alone. Nobody can figure out what’s going on right now. Whether or not Trump is trying to tank the USD to make onshoring in the USA more viable remains to be seen but it’s an idea I’m becoming seduced by, which I talked about in this week’s HotCopper Market Watch podcast.
Of course, that could be me telling myself what I want to hear. The other alternative is Donnie hasn’t got a plan at all, and that’s a bit more worrying.
(US Secretary of Commerce Howard Lutnick gave an interview to Bloomberg on Thursday evening our time when he described Trump’s ‘emotional’ way of doing things. He wouldn’t be drawn on further questions.)
The big C’s: Copper and cobalt surge
In commodities not too much happened this week though it’s worth flagging two things.
First: the US appears set to introduce tariffs on copper. In fact, to that end, the country of Peru is currently preparing a delegation to travel to the States in a bid to persuade the US to exempt the orange metal, at least as far as Peru is involved.
The success of this delegation will be closely watched by counterpart countries throughout Latin America, to be sure.
But it’s not just Trump who can shake up global markets – something which perhaps might be refreshing after the last month and a half.
So it was that when the Democratic Republic of the Congo moved to ban cobalt exports this week, the price of the critical and tech metal took off. Cobalt prices are up +30% over the last week and +55% over the last month.
Speaking of critical minerals, let’s touch back on home soil to end up this wrap – Canberra this week suggested to the US we could take our sovereign critical minerals ambitions to the doorsteps of other countries. We stopped short, of course, of threatening tariffs of our own.
Australian Equities
- ASX narrowly avoids a technical correction in Week 11
- Defensive stocks that have nothing to do with tariffs get slammed regardless
- Star Entertainment appears less completely screwed as Salter Brothers propose $1B lifeline
Australian Economy
- Australia unable to produce window glass after Oceania collapse: MacroBusiness
- Business turnover growth clocks strongest six months since August 2022
- Canberra hints to US that we could take sovereign critical minerals deals elsewhere
International Equities
- Goldman Sachs reduce S&P500 EO2025 forecast to 6,200pts from 6,500
- After terrible YTD run for Musk’s Tesla, JPMorgan predict worst quarter for delivery in 3Y
- German arms company Rheinmetall AG up 67% MoM as EU defence spend pact boosts
International Economies
- China’s stock market rallies as Trump tariff tirade shakes the tree on Wall Street
- Despite soft inflation, Morgan Stanley calls one US Fed rate cut for 2025
- Morgan Stanley also skeptical Trump tariffs will generate meaningful US revenues
Commodities
- Cobalt prices surge over +55% MoM as Congo moves to ban export of critical mineral
- Howard Lutnick tells media US tariffs will expand to copper
- LME copper prices hit 5mth high of US$9800/tn as China demand; tariffs loom
Geopolitics
- Pro-Business Greenlandic Democrat party wins leading stake in national election
- Kyiv flags willing to accept 30d ceasefire on Wednesday
- EU flag counter tariffs worth US$28B on Wednesday afternoon
