ASX 200 edges lower as trade tensions weigh

Image Source : Krish Capital Pty Ltd

Index Update: The S&P/ASX 200 closed lower on Monday, slipping 9.70 points or 0.11% to finish at 8,570.40, after a volatile session that saw the index recover briefly in the afternoon following early losses. Market sentiment wavered as investors digested comments from U.S. President Donald Trump, who announced a 30% tariff on goods from the European Union and Mexico, effective 1 August 2025. Over the past five sessions, the ASX 200 has declined 0.38% and now trades 0.80% below its 52-week high.

Sector performance was mixed, with seven of the 11 sectors closing in negative territory. The energy sector led the gains, rising 0.54%, though it remains down 0.07% for the week.

Macro Update: U.S. President Donald Trump escalated trade tensions with a series of tariff announcements targeting multiple countries. On Friday, he proposed raising the baseline tariff rate on all trading partners to 15% or 20%, up from the current 10%. Australia currently faces a 10% baseline tariff on most exports to the United States. In a follow-up post on his social media platform on Saturday, Trump declared that imports from the European Union and Mexico would be subject to a 30% tariff starting 1 August 2025. The announcement follows similar actions affecting imports from Japan, South Korea, Canada, and Brazil.

Top Market Movers: Leading the ASX 200 gains on Monday was Macquarie Technology Group Limited (ASX: MAQ), which climbed 9.63% to close at AUD 67.85. Clarity Pharmaceuticals Limited (ASX: CU6) followed, advancing 8.90% to finish at AUD 3.06, while Pilbara Minerals Limited (ASX: PLS) gained 6.45%, ending the day at AUD 1.65. On the downside, Lifestyle Communities Limited (ASX: LIC) recorded the sharpest decline, falling 9.19% to AUD 4.15. South32 Limited (ASX: S32) dropped 5.15% to AUD 2.95, and Block Inc. (ASX: XYZ) slipped 4.81% to close at AUD 98.67.

Commodity Update: The euro dropped to a three-week low on Monday, and the Mexican peso weakened after President Trump threatened 30% tariffs on EU and Mexican imports starting August 1. Gold rose 0.27% to USD 3,373.15, silver gained 0.45% to USD 39.12, and copper edged up 0.13% to USD 9,681.35. Brent crude climbed 0.20% to USD 70.48 amid tariff tensions and potential new U.S. sanctions on Russia, extending its weekly gains.

Our Stance: The S&P/ASX 200 closed slightly lower on Monday as markets reacted to renewed global trade tensions. President Trump’s tariff threats, including a 30% duty on EU and Mexican imports, weighed on sentiment. While most sectors declined, energy outperformed, rising 0.54%. Meanwhile, commodity markets remained firm, with gold and silver edging higher on safe-haven demand. While the market benchmark trading near all-time high levels indicate caution, traders are taking selective bets to benefit from evolving geopolitical situation, which is visible from individual sector performance.

The S&P/ASX 200 Index endured a challenging session, closing down 9.70 points and forming a bearish candlestick pattern amid higher trading volume. Despite this pullback, the index continues to trade above its 50-period Simple Moving Average (SMA) on the daily chart a critical support level. Notably, key support is identified near 8,480.50, a level closely watched by market participants. Holding above this threshold could help consolidate recent gains and reinforce confidence in the index’s upward trajectory. Additionally, the index’s position above the 21-period SMA on the weekly chart signals the potential for sustained bullish momentum. The alignment of these technical indicators across timeframes highlights the index’s resilience and supports a broadly positive outlook despite short-term volatility.