ASX set for steady start as RBA expected to hold rates and markets eye US tariff moves

The RBA is likely to leave the cash rate unchanged, while investors await commentary on Trump's broader tariff uncertainty, which should leave to a calm day for the ASX.

ASX 200 futures are up 0.9% to 7944 points.

The S&P/ASX 200 Index closed 138 points, or 1.74%, lower on Monday at 7,843, capping off a volatile end to March. The index recorded a 4.03% decline for the month and a 3.87% fall for the March quarter of 2025 — its first consecutive quarterly loss since 2022.

The local market mirrored Wall Street’s sharp sell-off on Friday, with investor sentiment further dampened ahead of former United States President Donald Trump’s scheduled “Liberation Day” tariff announcement on 2 April.

Markets were also unsettled by increasingly hawkish rhetoric from Trump, who threatened military action against Iran should a nuclear agreement not be reached. In addition, investment bank Goldman Sachs revised its 12-month forecast for a United States recession from 20% to 35%, adding to the risk-off mood in global equity markets.

“Quite simply, and as noted above in the US equity section, after their corrections between mid-February and mid-March, Australian and US equity markets are priced for a modest slowdown in growth and earnings. However, they are not priced for a recession, and if the US economy does enter a recession that path, stocks could fall another 10%,” IG Markets analyst Tony Sycamore said.
 
“While the rising risks of US recession support the calls for lower interest rates, the RBA is unlikely to do so its Board meeting this afternoon.  

“Instead, we expect the RBA to keep rates on hold at 4.1% and use the meeting to prepare the market for a 25bp rate cut in May, pending the release of in-line Q1 inflation data on April 30. The Australian interest rate market starts the day pricing in 18bp of RBA rate cuts for May and a cumulative 74bp of RBA cuts for 2025.” 

US markets close out quarter lower amid tariff tensions and ‘Liberation Day’ uncertainty

United States stock markets ended the month and quarter on a mixed note as investors grappled with heightened tariff tensions and uncertainty surrounding the impending April 2 “Liberation Day” deadline.

The Nasdaq 100 led declines, tumbling 7.69% in March and 8.25% over the first quarter. The S&P 500 followed, shedding 5.75% for the month and 4.59% for the quarter. The Dow Jones Industrial Average fared slightly better but still lost 4.20% in March and 1.28% over the quarter.

Last night’s rebound in key indices may have been influenced in part by month- and quarter-end rebalancing flows, alongside short covering ahead of the so-called Liberation Day — a pivotal moment tied to former President Donald Trump's economic agenda. However, considerable uncertainty remains around the policy trajectory from this point forward.

To date, implemented trade measures include a global 25% tariff on steel and aluminium, and the escalation of tariffs on Chinese imports from 10% to 30%.

Newly announced tariffs are set to begin this week, notably a 25% levy on automobiles effective from 3 April, and the activation of previously paused 25% tariffs on United States–Mexico–Canada Agreement (USMCA)–compliant goods.

Further announcements may follow, potentially including reciprocal tariffs such as value-added tax (VAT) measures and targeted sectoral tariffs. These could affect a range of industries, including pharmaceuticals, agricultural commodities, copper, and lumber.

“The baseline expectation is that reciprocal tariffs will be announced, starting at an average rate of 15% across all US trading partners, with negotiations in the weeks/months ahead likely to reduce them to 10% or thereabouts.” Sycamore noted.

“Reflecting the impact of tariffs and the uncertainty their haphazard roll out is causing, US investment bank Goldman Sachs yesterday revised higher its 12-month forecast for a US recession from 20% to 35% - up from 15% a few weeks ago. 

“Quite simply, after their corrections between mid-February and mid-March, US equity markets are priced for a slowdown in growth and earnings. However, they are not priced for a recession, and if the US economy enters recession, US stock markets could easily fall by another 10%.” 

European markets slump on tariff fears as gold hits record high

European sharemarkets closed at two-month lows on Monday as investor caution intensified following comments by United States President Donald Trump indicating tariffs would be imposed on all countries. The prospect of broad-based tariffs fuelled concerns of a global economic slowdown and triggered a sell-off in risk assets.

Basic resources stocks were among the hardest hit, falling 3.3% to their lowest level since 2020. Shares in Anglo American, Glencore, Rio Tinto and Antofagasta all dropped more than 3%.

• The continent-wide FTSEurofirst 300 index shed 1.5% on the day and closed March down 4.4%, although it gained 5.5% for the March quarter.
• In London, the FTSE 100 index lost 0.9%, falling 2.6% over the month but rising 5% over the quarter.

Currencies and commodities

Currencies

Currency markets reflected a stronger US dollar. 

• The euro declined from US$1.0846 to US$1.0785, ending near US$1.0815. 
• The Australian dollar slipped from 62.88 US cents to 62.18 US cents and was near 62.45 US cents by the US close. 
• The Japanese yen weakened from JPY148.70 per US dollar to JPY150.26, trading around JPY149.90 late in the session.

Commodities

Oil prices climbed to a five-week high on concerns of supply disruptions if the US imposes further tariffs on Russia or takes action against Iran. 

• Brent crude rose by US$1.11 or 1.5% to US$74.74 per barrel.
• US Nymex crude added US$2.12 or 3.1% to US$71.48 per barrel.

Base metal prices fell, with copper futures down 1.8% and aluminium lower by 1.1% amid tariff-related demand fears.

• Gold surged on safe haven demand, with futures rising US$36 or 1.2% to a record high of US$3,150.30 an ounce. Spot gold traded near US$3,123. The precious metal jumped around 18% in the March quarter, marking its strongest performance since September 1986.
• Iron ore futures declined US$1.26 or 1.2% to US$102.51 per tonne, pressured by demand concerns following steel production cuts in China.

What about small caps?

The S&P/ASX Small Ordinaries (XSO) gained 0.067% yesterday to finish at 3,003.20. Over the last five days, the index has lost 1.86%.

There has been some strong news this morning and you can read about the following and more throughout the day.

1. ArchTIS Ltd has completed the first sale of its Trusted Data Integration (TDI) platform in Japan, securing an annual licence agreement valued at A$390,000 with a Japan-based company. The agreement represents the first TDI sale following integration with the recently acquired Direktiv technology.
2. St George Mining Ltd has delivered a maiden JORC-compliant Mineral Resource Estimate for the Araxá Project in Brazil, confirming the presence of a globally significant high-grade niobium and rare earths deposit within a well-established mining jurisdiction.
3. Race Oncology Ltd has received Human Research Ethics Committee (HREC) approval from Bellberry to commence its Phase 1 clinical trial of RC220. The trial will be conducted at Gosford and Wyong Hospitals within the Central Coast Local Health District. Final site approvals and activations are anticipated in April, after which patient enrolment can commence.
4. Tamboran Resources Corporation has signed a non-binding Letter of Intent (LOI) with a wholly owned subsidiary of Arafura Rare Earths Ltd. The LOI facilitates discussions on a potential gas supply arrangement from Tamboran’s assets in the Beetaloo Basin to Arafura’s Nolans Rare Earth Project in the Northern Territory.