ASX set to edge up, Wall Street drops on Trump tariffs, AI jitters
Stan Choe
US stocks are falling after President Donald Trump took little time to increase his new tariffs and as investors continue to punish companies that could be losers in the artificial intelligence revolution.
The S&P 500 index lost 1 percent of its value after Trump said on Saturday that he would temporarily impose 15 percent tariffs on other countries. That’s up from the 10 percent rate the Supreme Court announced Friday in response to its decision striking down sweeping “reciprocal” duties on imports from around the world.
The Dow Jones lost 691 points, or 1.4 percent, while the Nasdaq composite fell 1.1 percent. The Australian share market is set to rise, with futures at 5.06am AEDT pointing to a gain of 13 points, or 0.1 per cent, at the open. The ASX lost 0.6 per cent on Monday. The Australian dollar was weaker at 70.61¢ at 5.16am AEDT. The reporting season continues with Nine Entertainment and Woodside Energy among the highlights.
Trump’s rapid shift toward more aggressive tariffs shows how much uncertainty still hangs over the global economy, even though the Supreme Court has said the president lacks the legal authority to impose sweeping “reciprocal” tariffs.
Beyond the 15 percent tariff, which could last up to 150 days unless Congress extends it further, Trump is turning to other avenues to impose more permanent tariffs on countries and industries. This situation worries trading partners around the world. Uncertainty could worsen if the Trump administration continues to impose new tariffs under alternative laws, South Korean Commerce Minister Kim Jung-kwan said on Monday.
Of course, Monday’s moves in the markets were not as bad as the panic that swept the world in April when Trump first announced his “Emancipation Day” tariffs.
The value of the US dollar was only slightly lower against other currencies on Monday, while Bitcoin briefly fell below $65,000 but remained above the low it reached earlier this month. Gold has continued to rise thanks to its recognition as a safer thing to own in uncertain times.
Investors may be sensing that it will be a long time, as well as more court battles, before there is more clarity on what global trade will look like.
“Stocks got a boost from the Supreme Court’s tariff decision on Friday, but it quickly became clear that the ruling would open a new chapter in the trading saga, not end it,” according to Morgan Stanley’s Chris Larkin, managing director of trading and investment at E-Trade.
Big losses on Wall Street hit companies under suspicion of being undermined by AI-powered rivals. Investors have been punishing the shares of such companies harshly and abruptly lately.
CrowdStrike fell 8.4 percent, bringing its first-year loss to 24 percent. A new tool from Anthropic that scans codebases for vulnerabilities and recommends targeted software patches for human review is hitting stocks in the cybersecurity industry.
AppLovin lost 8.2 percent of its value. It is among software companies hurt by concerns that AI competition will steal customers and fundamentally reset their industries.
More big moves could be in store for Wall Street this week, especially with Nvidia’s earnings report coming out on Wednesday.
Concerns are growing that companies like Alphabet and Amazon are spending too much on Nvidia’s chips and that they may never recoup their investments with higher productivity and future profits.
Elsewhere on Wall Street, airline stocks fell after heavy snowfall and high winds canceled thousands of flights in the busy Northeast.
United Airlines lost 4.8 percent, American Airlines lost 4.5 percent and Delta Air Lines lost 3.5 percent.
U.S.-traded shares of Novo Nordisk tumbled 15.5 percent after the Danish drugmaker said a trial of its drug CagriSema showed people lost less weight compared with a similar drug made by rival Eli Lilly. Eli Lilly rose 4.5 percent.
Stock markets abroad and indices in Europe fell. Stocks were on the rise after the Supreme Court’s decision on Friday.
In Asia, where markets had their first chance to react to the court’s ruling, Hong Kong’s Hang Seng rose 2.5 percent while South Korea’s Kospi rose a more modest 0.6 percent. Markets in Japan and mainland China were closed for holidays.
In the bond market, the yield on the 10-year Treasury note fell from 4.08 percent to 4.03 percent at the end of Friday.
It’s a “coin toss” over whether the Fed will cut its key interest rate or pause again at its next meeting in March, a senior Federal Reserve official said Monday.
Statements from the Fed. Governor Christopher Waller has undergone a remarkable shift since January, when he was one of two Fed governors to oppose the central bank’s decision to keep interest rates steady after three interest rate cuts at the end of last year.
Low interest rates will stimulate the economy, and Trump is furiously lobbying on their behalf. But they could also risk worsening inflation.
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