ASX trims early gains, but stays in the green as utilities rise

The real estate sector had a strong morning, jumping 1.6 per cent, but trimmed those gains to 0.7 per cent. Data centre and warehouse giant Goodman Group rose 1.1 per cent. Shopping centre owner Vicinity added 0.5 per cent, however its rivals Stockland and Westfield operator Scentre ended flat.

The laggards

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The trading session’s gains were limited by a lacklustre performance from both the financials and the materials sectors, which together make up more than half of the local market.

Mining heavyweights BHP and Rio Tinto finished up 0.1 per cent and 0.3 per cent, respectively, while Fortescue Metals shed 1.7 per cent, as iron prices weakened by more than 2 per cent to $US101.95 per tonne overnight.

Financial stocks lacked clear direction after lunchtime. The Commonwealth Bank – the biggest stock on the ASX – ended 0.4 per cent lower. Westpac rose 1.2 per cent and ANZ was up 0.4 per cent. National Australia Bank lost 2.3 per cent.

Shares of jobs site Seek (down 0.7 per cent) and debt collector Credit Corp (down 2.4 per cent) declined as they went ex-dividend, meaning they traded for the first day without giving the right to their latest dividends.

The lowdown

Tuesday’s trading session saw investors tip-toe back into the market in the morning to mop up buying opportunities following last week’s $60 billion sell-down, and move into defensive stocks less dependent on economic growth, such as utilities, amid the global uncertainty created by Donald Trump’s tariff tornado.

The ASX’s advance came after America’s S&P 500 rose 0.6 per cent overnight, posting its second straight gain after it fell 10 per cent below its record late last week. The Dow Jones climbed 0.9 per cent and the Nasdaq composite added 0.3 per cent.

“No news from Trump is good news at the moment,” Betashares chief economist David Bassanese said.

The past three sessions were a welcome reprieve for investors after the ASX entered a correction last week, having lost more than 10 per cent from its peak in February as markets were getting increasingly jittery about the global trade implications of Trump’s policies.

However, the market bravado vanished in the afternoon on Tuesday as US market futures slumped following Israel’s fresh airstrikes in Gaza, which shattered a ceasefire in place since mid-January. It was the second military escalation in the Middle East in as many days after the US on Monday vowed to continue attacking Houthi rebels in Yemen over the group’s strikes on commercial ships.

“The tariff tit-for-tat had sort-of died down recently and [US President Donald] Trump had given markets breathing room to recover somewhat, but that positive has been offset with the return of geopolitical tensions,” Bassanese said.

More big swings could still be ahead, with a decision by the Federal Reserve on interest rates coming later this week and worries continuing about Trump’s trade war.

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Stocks have been mostly tumbling on worries that Trump’s announcements on tariffs and other policies will hurt demand and push up consumer prices in the US and elsewhere.

A report on Monday said US retailers broadly saw weaker revenue last month than economists expected, but much of the shortfall was due to weaker-than-forecast sales of automobiles and lower fuel costs. Outside of them, the performance was closer to expectations.

That’s the precarious stage onto which Federal Reserve chair Jerome Powell will step onto on Wednesday, when he announces the US central bank’s latest decision on interest rates. Virtually no one expects the Fed to make a move this week. The central bank has been keeping rates steady so far this year, preferring to see how conditions play out.

Wall Street’s focus will be on what Powell says about the rest of the year. Expectations are still high the Fed may cut its main interest rate two or three times in 2025. The risk of cutting interest rates too quickly or aggressively is that it could push up inflation. But keeping rates too high for too long could also create unnecessary pain for the world’s largest economy by slowing borrowing and overall activity.