ASX set to slide; James Hardie in $14b merger with US firm

Stocks have been losing ground for weeks over uncertainty about the direction of the US economy. A trade war between the US and its key trading partners threatens to worsen inflation and hurt both consumers and businesses. Inflation remains stubbornly above the Federal Reserve’s goal of 2 per cent and tariffs could hurt the central bank’s efforts to ease the rate of inflation.

President Donald Trump has set an April 2 deadline to impose more tariffs on trading partners. It follows a series of other deadlines that have been set for tariffs only to be postponed, sometimes at the last minute.

“Investors are confused, but there’s a lot less panic infusing the market,” said Mark Hackett, chief market strategist at Nationwide.

Businesses have been warning investors about tariffs, inflation and growing uncertainty about the impact to costs.

Nike slumped 5.5 per cent after it forecast a steep decline in revenue in the current quarter, blaming geopolitical dynamics, new tariffs by the Trump administration and a less confident consumer.

FedEx tumbled 6.4 per cent after the package delivery company said it expects revenue to be flat to slightly down year-over-year and lowered its per-share profit guidance.

Homebuilder Lennar fell 4 per cent after giving investors a weaker-than-expected forecast for new orders and average sales prices for the current quarter. It said high interest rates, inflation, and waning consumer confidence are weighing on an already tough housing market.

High interest rates have been a key issue for the housing market. The Federal Reserve held its benchmark interest rate steady at its most recent meeting this week as it assesses the potential impact from tariffs and other US policy shifts.

The Fed cut interest rates through the end of last year amid consistently easing inflation rates, but has been holding steady so far in 2025. Lower rates can bolster the economy, but they can also push inflation higher.

Fed Chair Jerome Powell has acknowledged that the economy remains solid, but stressed that uncertainty is making forecasting difficult.

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“With Fed Chair Powell acknowledging that the effect of tariffs on consumer confidence, economic growth and inflation remain unknown, we might be in this below-water holding pattern until after April 2,” said Sam Stovall, chief investment strategist at CFRA.

A recent batch of economic reports on home sales, industrial production and unemployment reinforced the view that the economy is holding strong. But other reports on consumer sentiment and retail sales have revealed rising caution from consumers.

“We’re in really pessimistic territory,” Hackett said. “When everybody is pessimistic, that’s when a tiny bit of optimism can move markets pretty strongly.”

In the bond market, Treasury yields mostly held steady. The yield on the 10-year Treasury rose to 4.25 per cent from 4.23 per cent late Thursday.

Airlines were under pressure. A fire knocked out power at London’s Heathrow Airport, forcing it to shut down and disrupting global travel for hundreds of thousands of passengers. Ryanair Holdings fell 1.5 per cent.

Shares in several US-based airlines were mixed. American Airlines rose 1.2 per cent, United Airlines added 1.1 per cent and Delta Air Lines fell 0.4 per cent.

Troubled airplane maker Boeing surged 3.1 per cent after Trump said Boeing will build the Air Force’s future fighter jet. The company has been facing scrutiny over safety issues for years.

Boeing’s rival in the defence sector, Lockheed Martin, slumped 5.8 per cent.

All told, the S&P 500 rose 4.67 points to 5,667.56. The Dow gained 32.03 points to 41,985.35, and the Nasdaq rose 92.43 points to 17,784.05.

Markets in Europe fell. Britain’s FTSE 100 shed 0.6 per cent after the Bank of England held its main interest rate steady a day earlier.

Germany’s DAX slipped 0.5 per cent. German lawmakers voted for a budget that will boost defense and infrastructure spending.

AP

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