Trade war victims: flushing out…with more to come! | Australian Markets

Here are three issues I’m fascinated about at the moment…

1. Our first trade war victims are getting flushed out.

We don’t have to look far to see the primary one. It’s oil!

This bought clobbered after OPEC determined to increase manufacturing. That begins now. Those additional barrels will now hit the market simply as demand is set to go down. Here’s why you care.

The Wall Street Journal reviews:

“In the biggest oil field in the U.S., dismayed frackers are starting to reconsider their drilling plans because they anticipate demand for their product to weaken—in part as a result of Trump’s erratic shifts on trade.”

Let’s verify in on how Trump’s making the American oil industry “great again”.

Hmm. US vitality corporations are getting slaughtered alongside the oil price. Check it out…

The different week I mentioned the US may have low gasoline costs or a roaring oil industry.

Trump promised each, regardless of them being polar opposites.

Then again, he’s by no means been one to let the details get in the way in which of the story.

Hmm.

All that is a good factor for the remainder of us.

Lower oil costs go straight to shoppers as additional {dollars}.

They additionally help decrease inflation.

That takes down rates of interest. That ought to bolster the outlook for the share market over the 12 months.

There is one caveat to this. Trump goes laborious on Iran. A flare up within the Middle East may reverse the oil price fast sensible.

2. Now I current the subsequent sufferer…

Reliance Worldwide (RWC) is a construction provides company on the ASX. It’s a respectable presence within the USA. The catch? 48% of their materials is sourced from exterior America.

RWC put out a market replace this morning.

Tariffs are going to price them no less than $25-30 million in restructuring and bills. They’re now scrambling to source their stock from wherever however China.

Plus, the outlook is sinking too. They write…

“A full year trading outlook for FY25 was provided in RWC’s interim earnings announcement released on 18 February 2025.

“Since then, economic conditions in the US have deteriorated, due mainly to the uncertainty surrounding the introduction of higher tariffs between the US and its trading partners.

“This has contributed to declining consumer confidence and reduced demand.”

Watch the stock to see how a lot it declines. RWC is already down since final September.

I’m guessing most of this was the market leaping ship as soon as it turned possible Trump would get in.

However, it’s one factor to count on a 10-20% tariff on Chinese imports. They’re at present 145%.

The US housing market can be “frozen”, in accordance to reviews, thanks to high mortgage charges and costly costs.

So, not a lot to bolster RWC for the second. It will possible grind alongside for a long whereas now.

There are a lot of traps like this on the market now.

Also take into account…

3. …This chart from Firetrail on the ASX outlook

They say…

“Earnings risk is starting to rise.

“Research from Goldman Sachs shows that to hit FY 2025 consensus earnings, the average ASX 200 Industrial would need to deliver its strongest second half earnings skew in two decades.

“This suggests the market could see a wave of earnings cuts in the upcoming “confession season” forward of August outcomes.”

Point being: make sure you understand your stock, or you could possibly get whacked in the event that they disappoint.

Remember, too, all that is more relevant to the Top 200.

There continues to be loads of alternative within the small sector of the market. Good shopping for too.

Here’s shrewd fund supervisor Matthew Kidman showing within the Australian Financial Review at the moment…

“So we’ve started to churn some of these large caps out over the past few weeks, which had served us well defensively … but now we’re thinking it’s better to get back on the bike we ride normally and take on more risk.”

The article says he’s been shopping for back into the market, and plans to keep going. Sounds sensible to me, as long as you keep the same old dangers within the share market in thoughts.

As Buffett says, “Be fearful when other people are greedy, and greedy when others are fearful.”

Indeed, the great man from Omaha introduced his retirement over the weekend. What an epic journey.

Hopefully, he lives to 100 and past to see Berkshire keep fruiting.

Regards,

Callum Newman,
Editor, Small-Cap Systems and Australian Small-Cap Investigator

With Trumps insurance policies inflicting an exodus from the US greenback, the Australian greenback is beginning to look promising for more upside.

The current collapse within the Australian greenback noticed it plummet into a main buy zone between 58-62 cents.

The restoration has been swift because the US greenback turned down sharply during the tariff tantrum.

If the Aussie can maintain these ranges till the top of this month that can verify a month-to-month buy pivot from a main buy zone.

That may increase the chances of more upside forward for the Aussie greenback in coming months.

Regards,

Murray Dawes,
Editor, Retirement Trader and Fat Tail Microcaps

All advice is common advice and has not taken under consideration your personal circumstances.

Please search impartial financial advice concerning your own state of affairs, or if doubtful concerning the suitability of an investment.

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