The Australian sharemarket remains slightly in the red at lunchtime after Wall Street inched to a record on the back of Donald Trump announcing the US and Japan had reached a trade deal, while there is speculation the US and the European Union are on the cusp of their own agreement.

The S&P/ASX 200 slid by 7.2 points, or 0.1 per cent, to 8730.0 at 12.35pm AEST, with four of the 11 sectors in positive territory, led by healthcare stocks.

Macquarie shares slumped 4.4 per cent. In a quarterly update released on Thursday, ahead of its annual meeting, the group announced that company chief financial officer, Alex Harvey, was stepping down after a 28-year career at Macquarie. The company also said its profits were down in its first quarter.

The big four banks are higher. NAB added 1 per cent, Westpac gained 0.6 per cent, Commonwealth Bank – the biggest stock on the index – rose 0.4 per cent and ANZ inched up by 0.1 per cent.

Mining giant Fortescue, chaired by billionaire Andrew Forrest, jumped 3.3 per cent after it revealed on Thursday it had shipped a record volume of the steel-making material iron ore from its mines in Western Australia in the year to June 30.

Despite an economic downturn cooling demand from steel mills in China, by far the biggest buyer of Australian iron ore, Perth-based Fortescue said it had shipped 55.2 million tonnes of iron ore in the three months through June, taking its full-year volume to an all-time high of 198.4 million tonnes. Among the other big miners, BHP edged up 0.1 per cent while Rio Tinto lost 0.4 per cent.

Meanwhile, the federal government has lifted its longstanding de facto ban on US beef, addressing one of the key trade complaints that Trump used to justify his tariffs on Australia but starting a potential fight with farmers and biosecurity experts. Australian Agricultural Company shares are 1 per cent lower in early afternoon trade.

The Australian dollar was fetching US66.08¢ at 12.40pm.

Overnight, US stocks set more records. The S&P 500 added 0.8 per cent to its all-time high. The Dow Jones rallied 507 points, or 1.1 per cent, and the Nasdaq composite climbed 0.6 per cent to hit its own record.

Elsewhere, stocks jumped in Tokyo, where the Nikkei 225 rallied 3.5 per cent after President Donald Trump announced a trade framework that would place a 15 per cent tax on imports coming from Japan. That’s lower than the 25 per cent rate that Trump had earlier said would kick in on August 1.

“It’s a sign of the times that markets would cheer 15 per cent tariffs,” said Brian Jacobsen, chief economist at Annex Wealth Management. “A year ago, that level of tariffs would be shocking. Today, we breathe a sigh of relief.”

Trump has proposed stiff taxes on imports from around the world, which carry the double-edged risk of driving up inflation for US households while slowing the economy. But many of Trump’s tariffs are currently on pause, giving time to reach deals with other countries that could lower the tax rates. Trump also announced a trade agreement with the Philippines on Tuesday.

So far, the US economy has seemed to hold up OK despite the pressures on it. And tariffs already in place may be having less of an effect than expected, at least when it comes to the prices that US households are paying at the moment.

“The main lesson about tariffs so far is that pass-through to consumer prices is tracking somewhat lower than in 2019,” according to Goldman Sachs economist David Mericle.

Tariffs are certainly having an effect, to be sure, as big US companies across industries have been showing through their profit updates in recent days.

Hasbro took a $US1 billion ($1.5 billion), non-cash hit to its results to write down the value of some of its assets following a review triggered by the implementation of tariffs. It said tariffs have had no impact yet on how much profit it’s making from each $US1 of its sales, but it expects to see costs ramp during the current quarter.

Hasbro’s stock fell 0.9 per cent even though it reported a stronger profit for the latest quarter than analysts expected, when not including the $US1 billion charge.

Texas Instruments’ stock also fell despite delivering results for the latest quarter that were above analysts’ expectations. It gave a forecasted range for profit in the current quarter whose midpoint fell a bit shy of Wall Street’s.

Analysts pointed to some cautious commentary from Texas Instruments executives about how the uncertainty created by tariffs could slow demand. Its stock sank 13.3 per cent.

Most of the stocks on Wall Street nevertheless rose, including a 14.6 per cent jump for GE Vernova. The energy company not only delivered a stronger profit than analysts expected, it also raised its forecasts for revenue from its power and electrification businesses.

GE Vernova said that the inflation it’s expecting to see as a result of tariffs may be trending toward the lower end of $US300 million to $US400 million, net of mitigating actions.

Lamb Weston rallied 16.3 per cent after the supplier of French fries and other potato products delivered better results for the latest quarter than analysts expected and said it expects customers will continue to eat fries even with an uncertain economy. It also announced a plan to cut at least $US250 million in costs by cutting about 4 per cent of its workforce and making other moves.

All told, the S&P 500 rose 49.29 points to 6,358.91. The Dow Jones Industrial Average jumped 507.85 to 45,010.29, and the Nasdaq composite gained 127.33 to 21,020.02.

In the bond market, Treasury yields ticked higher.

The yield on the 10-year Treasury rose to 4.38 per cent from 4.35 per cent late Tuesday.

AP

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