ASX Slips Amid Tariff Tensions as Commodities Show Mixed Signals

Highlights 

• ASX 200 dips as U.S. trade tensions escalate with new steel and aluminum tariffs. 
• Consumer sentiment declines amid inflation concerns following tariff announcements. 
• Commodity markets remain volatile, with gold steady and copper seeing gains. 

The Australian stock market faced pressure at the start of the week as global trade tensions intensified. The S&P/ASX 200 index dropped 53.6 points (0.63%) to 8,457.8 by 10:30 AM AEDT on February 10, marking a 0.87% decline over the past five days. The index now sits 1.27% below its 52-week high. 

The latest market turbulence follows an announcement from U.S. President Donald Trump, imposing 25% tariffs on steel and aluminum imports, affecting all trading partners, including Australia. Investors reacted cautiously to this development, leading to broad-based losses across sectors. 

Wall Street Weakness Adds to Pressure 

The volatility in Australian markets mirrored declines on Wall Street, where U.S. indices closed lower on February 7. A strong U.S. labor market report suggested that the Federal Reserve might slow down rate cuts, reducing investor optimism. 

Economic analysts are closely watching February data for initial signs of how markets and businesses are reacting to these early policy changes. According to experts, consumer sentiment has already shown a negative response to the tariff announcements. 

Consumer Sentiment Drops as Inflation Expectations Rise 

Recent data from the University of Michigan’s consumer sentiment survey revealed a significant drop of 3.3 points to 67.8, the lowest in 16 months. Inflation expectations for the next year jumped from 3.3% to 4.3%, reflecting concerns over rising costs. 

Analysts pointed out that while short-term inflation expectations climbed, long-term outlooks remained stable. The survey, conducted before February 4, factored in tariff announcements involving Canada and Mexico, indicating that investors and consumers are bracing for economic uncertainty. 

Commodities Mixed as Markets Seek Safe Havens 

Amidst market volatility, gold remained strong, benefiting from increased demand for safe-haven assets. Meanwhile, copper posted its best weekly gain since September, driven by rising global demand. 

Eight of the eleven sectors in the S&P/ASX 200 were in negative territory, with materials down 0.35%, industrials slipping 0.28%, and energy marginally lower by 0.01% in early trading. 

One bright spot was Champion Iron (ASX:CIA), which defied the broader market trend, gaining 2.5% to $5.74 after the opening bell. 

As markets navigate heightened uncertainty, investor focus remains on economic data, trade negotiations, and potential policy shifts that could shape the direction of global markets in the coming weeks.