Market update: 4 March 2025
The ASX 200 fell 1.5% this week, extending its decline to 4.6% below all-time highs reached just two weeks ago. The selloff was driven by weak corporate earnings and renewed tariff concerns, with 8 out of 11 sectors closing lower. The technology sector led declines, tumbling 12.3% after Wisetech’s governance issues sent the stock down 35% YTD. However, there were some positives—Australia’s monthly CPI held steady at 2.5% in January, despite an 8.9% MoM rise in energy prices as rebates rolled off. Encouragingly, more inflation components are running below 2% YoY than above 3%, reinforcing expectations that price pressures are easing.
Global markets also struggled, with Trump indicating a 25% tariff on Canada and Mexico starting 4th March and an additional 10% charge on Chinese imports. This triggered a technology-led selloff in the US, with the Nasdaq down 3.5% and the S&P 500 falling 1.0%, while the Dow Jones managed a 1.0% gain. Despite strong Q4 GDP growth of 2.3%, consumer confidence dropped sharply, marking its third consecutive decline. Investors rotated out of technology and into defensive sectors, with the Magnificent 7 falling 5.7%. European markets held up better, with strong earnings lifting the Euro Stoxx 600 by 0.6%, though Trump’s threats of EU tariffs dampened sentiment. In Greater China, Hong Kong and Shanghai markets fell 2.3% and 1.7% respectively, but Alibaba’s US$53bn AI investment plan helped cushion the decline.
In Japan, the Nikkei dropped 4.2%, hitting a five-month low, as chip stocks tumbled following Nvidia’s post-earnings selloff. Meanwhile, core CPI eased to 2.2% YoY, slightly below expectations, fuelling speculation around future Bank of Japan policy moves. With global inflation trends shifting and tariff risks escalating, we’ll continue to monitor how markets react.
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