Australian shares dip as Trump's tariffs target copper
At midday on Wednesday, the benchmark S&P/ASX200 index was down 27.2 points, or 0.32 per cent, to 8,565.3, while the broader All Ordinaries lost 25.5 points, or 0.29 per cent, to 8,803.2.
Overnight, the US president said drug manufacturers would be given a year or so to move manufacturing to the US, otherwise they would "tariffed at a very, very high rate, like 200 per cent".
Mr Trump also flagged the White House would be imposing 50 per cent tariffs on copper, which Commerce Secretary Howard Lutnick said could begin at the end of July or start of August.
Copper prices surged after the comments, ending the trading day up 13.1 per cent for their strongest one-day gain since 1989.
Australia is a major copper producer but exports very little to the United States, with most going to China and other Asian-Pacific countries. The US gets most of its copper from Chile.
"The idea is to bring copper home, bring copper production home," Mr Lutnick said later on CNBC.
IG analyst Tony Sycamore said that encouraging domestic copper production was a challenging objective given the complexities of relocating a copper mine.
At midday, seven of the ASX's 11 sectors were lower, with financials flat and energy, consumer discretionary and utility shares collectively higher.
The materials sector was down 0.6 per cent, with the iron ore giants higher and goldminers down as the price of the yellow metal dropped to a one-week low of $US3,310 an ounce.
BHP was up 0.4 per cent, Fortescue had added 0.7 per cent and Rio Tinto had advanced 0.6 per cent, while Northern Star was down 4.1 per cent, Evolution had retreated 8.8 per cent and West African Resources dropping 4.6 per cent.
Sandfire Resources, the largest copper-focused miner on the ASX, was down 3.8 per cent, while Capstone Copper Corp had retreated 2.9 per cent.
In the energy sector, uranium explorers and producers were under pressure, with Bannerman Energy falling 7.9 per cent and Deep Yellow retreating 7.1 per cent.
In the financial sector, the big four banks were mostly higher. Westpac had added 0.8 per cent, ANZ was up 0.2 per cent and NAB had advanced 0.4 per cent. CBA was the outlier, dropping 0.2 per cent.
In real estate, Lifestyle Communities had plunged 36.2 per cent to an eight-year low of $4.495 after a Victorian tribunal found the land lease operator breached the state's tenancy laws by charging residents significant exit fees without properly disclosing them.
Lifestyle Communities said it relied on legal advice when drafting the contracts, was disappointed with the outcome and intended to appeal.
In health care, Telix Pharmaceuticals was up 6.6 per cent after its prostate cancer imaging agent was granted a permanent insurance code by the US Medicare and Medicaid system.
The Australian dollar was buying 65.20 US cents, from 65.43 US cents at close of business on Tuesday.
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"On the supply side, Argentina and Australia remain critical players with Argentina offering tier-1 brine resources, increased judicial and regulatory certainty, low-cost extraction potential, and faster development pathways. Demand for lithium isn't disappearing; it's shifting regionally. This transition is fuelling a new wave of investment, and competition across the global battery materials landscape." JC: "China doesn't look like it's giving up first place any time soon. They have really bet the farm on lithium and invested a huge amount of capital in the battery supply chain going back at least 10 years. "There's a long way to go before EVs inevitably overtake vehicles on the road, so I expect growth and innovation in the EV sector to continue apace. There's pretty strenuous competition going on between the new Chinese car manufacturers and the old car companies, with new models coming out all the time. 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AR: "The lithium sector continues to face real challenges over the next 12 months with ongoing price volatility and a significantly tighter capital environment making it increasingly difficult for developers to raise the funds needed to progress projects compared to other commodities such as gold or copper. Negative sentiment around spodumene oversupply continues to cloud investor outlook, even though brine based projects remain comparatively low cost and economically robust even at current price levels of between US$8-10,000/t for lithium carbonate. "Despite these challenges, there are clear opportunities emerging. Juniors with pilot scale operations or near term development timelines, particularly in Argentina, are well positioned to attract offtake interest as buyers look to diversify. ESG aligned, low cost brine projects are gaining traction with Western partners, and any recovery in sentiment, or lithium demand could sharply re-rate quality assets that are development-ready. "Companies that come out with massive production targets above 20,000tpa of new material without the balance sheet to support it or are NPV chasing to try and look good in the market will struggle to gain investor interest. Investors can see the demand piece for lithium remaining intact with demand set to hit near 3 million tonnes by 2030, however it's capital discipline and realistic scalable projects that will win out long term." JC: "I feel a little relieved that Delta isn't trying to navigate this price trough as a producer. Our challenge at Delta is to position our business and manage capital effectively through the downturn, keep our projects ticking along and be ready to come out of the blocks when real improvement shows up."
