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Over in the US on Tuesday markets rallied with the S&P500 and Dow hitting fresh record highs as investors assessed the threat of new tariffs from incoming President-elect, Donald Trump. Trump called for a 25% tariff on products from Mexico and Canada on Monday as well as an additional 10% tax on Chinese goods on top of the 20% already promised on goods from the region, in a bid to stimulate domestic demand within the US economy. Despite the potential impact of the tariffs, the Dow Jones rose 0.3% to a fresh record 44,860.31 points, the S&P500 also rose 0.57% to a fresh record 6,021.63 points and the Nasdaq ended the day up 0.63%.

Across the European markets overnight, markets closed lower as investors in the region digested the implications of Trump’s plans to hike tariffs on China, Mexico and Canada. The STOXX 600 fell 0.5%, Germany’s DAX lost 0.56%, the French CAC fell 0.87%, and, in the UK, the FTSE100 ended the day down 0.4%.

In Asia on Tuesday, markets closed mixed on the back of key economic data being released in the region. Japan’s Nikkei fell 0.87% amid a slowdown in service PPI to a rise of 2.9% YoY from 2.8% in the previous month, while Hong Kong’s Hang Seng rose 0.05%, China’s CSI index added 0.21% and South Korea’s Kospi index ended the day down 0.55%.

The local market closed 0.7% lower on Tuesday dropping from Monday’s fresh record close, as a 3% slide among energy stocks weighed on the key index, despite consumer staples stocks rising over 1% and the tech sector rebounding. The major cause of the sell-off yesterday was due to investor fears of increased tariffs to come from President-elect Donald Trump when he re-enters office.

The fall in energy stocks follows investor hopes of a ceasefire between Israel and Hezbollah that would possibly lead to stability in the price of oil.

Despite investor fears of rising tariff to be implemented when Trump comes into office, investors still found an opportunity in the local market through buying into companies that generate significant revenues from operating in the world’s largest economy.

Reece shares rose 2.2% as the plumbing giant operates in the US, while BlueScope Steel ended the day up 5.6% as investors see opportunity in the earnings potential for these two operators in the North American region.

Webjet shares fell 2% on Tuesday after the travel agent released its first results since demerging from Web Travel Group. For the first half, bookings fell 8%, total transaction value declined 8% to $752m, revenue dropped 1% and NPAT rose just 2.2%, all of which reflected a challenging macroeconomic environment for the online travel agent.

What to watch today:

• Ahead of the midweek trading session here in Australia the SPI futures are anticipating the ASX will open the day up 0.45% on the back of Wall Street’s slight rally overnight.
• On the commodities front this morning, oil is trading 0.74% lower at US$68.43/barrel, gold is up 0.61% at US$2626/ounce and iron ore is up 0.06% at US$102.01/tonne.
• The Aussie dollar has slightly weakened against the greenback to buy US$0.65, 98.95 Japanese Yen, 51.59 British Pence and NZ$1.11.

Trading Ideas:

• Bell Potter has increased the 12-month price target on Kogan.com (ASX:KGN) and maintain a hold rating on the online multi-brand retailer following the release of a trading update for the first 4-months of FY25 including gross sales up 0.4% on the PCP and adjusted EBITDA up 55% on the PCP, with topline growth tracking inline with Bell Potter estimates despite challenging market conditions.
• And Trading Central has identified a bullish signal on Harvey Norman (ASX:HVN) following the formation of a pattern over a period of 26-days which is roughly the same amount of time the share price may rise from the close of $4.79 to the range of $5 to 5.06 according to standard principles of technical analysis.