ASX Market Outlook: Pre-Open Brief 02.03.2025
ASX Stock Market Outlook
The ASX 200 is bracing for a sharp drop at the open, with ASX S&P 200 futures down 1.13%, a dramatic reversal following two weeks of modest gains. Wall Street’s brutal overnight session has wiped the weekend’s relief rally off the map.
The macro picture is ugly.
It’s a double shot of sticky inflation and geopolitical chaos, capped off by Donald Trump’s so-called ‘Liberation Day’, where sweeping new tariffs come into force.
Despite finishing up 0.6% last week, sentiment has soured fast. ASX S&P 200 futures signal a drop of more than 90 points at the open. Tech, financials, and Asia-exposed sectors will likely bear the brunt as traders pivot hard to safety.
Expect usual risk-off moves. Strength in gold miners and defensives, but a rough ride ahead for growth names and anything cyclical. The Reserve Bank held rates steady yesterday, offering no dovish surprises to cushion the blow.
Overnight Wrap: Inflation Rears Its Head Again
The S&P 500 dropped 0.36%, the Dow fell 0.06%, and the NASDAQ tumbled 0.83%. That’s off the back of a red-hot US PCE inflation read, which saw prices jump 0.4% in February, above expectations. That re-lit fears of a more hawkish Fed and bond markets took the bait.
The US 10-year yield surged 10bps to 4.25%, while the 2-year yield climbed to 3.91%. Equities buckled under the pressure, and the VIX Index shot back above 20, flashing a clear caution signal.
Globally, there was nowhere to hide:
DAX Futures fell 1.57%
FTSE 100 Futures lost 0.6%
Hang Seng Futures dropped 0.44%
China A50 Futures slipped 0.3%
European markets are also jittery over signs of policy divergence, and Asian equities are being dragged down by Taiwan tensions and US trade war rhetoric.
The Play Today
Today’s open is about survival, not glory.
Gold should see strength — it’s flat on the futures board (US$3,148), but local producers could benefit as traders flee to safe havens.
Defensive sectors like healthcare and utilities may outperform, but expect broad-based selling across tech, consumer discretionary, and anything leveraged to China.
Keep one eye on China-Taiwan headlines. Any escalation here could see sentiment spiral lower, especially for local exporters and financials.
It’s also a day where currencies could see some action. AUD/USD is ticking higher at 0.6268, but that move may reverse fast if global risk sentiment deteriorates further. The Yen is also in focus — up slightly overnight, and often a go-to when markets panic.
Major Themes Driving the Financial Markets:
Inflation in Japan: The return of inflation to Japan has major implications. Japanese Government Bonds are tanking as the market factors in higher rates over time. This has the potential to lead to a highly disruptive unravelling of the Yen Carry Trade.
Trade Tensions and Tariffs: The Trump administration's tariff policies continue to inject volatility into global markets. The potential for higher inflation and slower growth—stagflation—remains a concern. Nasdaq futures are up again overnight. AI, semis, and mega-cap tech are leading the charge globally. Can Aussie tech keep up?
Tech Sector Dynamics: Significant movements in major tech stocks, particularly companies like Tesla and Alphabet, highlight the sector's sensitivity to broader economic indicators and policy decisions. Investors should monitor these developments closely.
Economic Data to Watch this Week:
Economic Data to Watch This Week:
Monday: Chinese Manufacturing PMI, German Prelim CPI
Tuesday: RBA rate decision
Friday: US Non-farm Unemployment, Fed Chair Powell to talk
Global Market Prices
Global Markets (Source: TradingView)
ASX Sector Utilities
The Utilities sector is ignoring all this recession talk, demonstrating the power of defensive stocks in a risk-off environment.
ASX Utilities sector index (Source: TradingView)
ASX Stock to Watch: Austin Engineering (ASX:ANG)
Austin Engineering is shaking off it’s ex-dividend date. If it can regroup quickly, we may see a return to upward momentum.
ASX Stocks to Watch (Source: TradingView)
The Daily Brief is prepared in partnership with Vitti Capital.
