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Here’s what you need to know today

• Trump’s tariffs and the market’s response remains the biggest story, so here’s your quick summary of how markets moved in the past 24 hours:
  - On Tuesday night (Australian time) America’s S&P 500 was flat (up 0.2%)
  - Australia’s ASX 200 followed and was up yesterday (+2%)
  - Hong Kong’s Hang Seng was up 2% after falling 13% on Monday, its worst day since 1997
  - Last night the S&P opened up almost 4% before plummeting during the day to finish down 3%.
  
  

• What caused that reaction from the US market last night? The White House announced it would go ahead with the additional 50% tariff on China, after China did not alleviate its retaliatory 34% tariffs. This will take the total tariff on Chinese imports to 104%. (The Guardian)
  
  

• In response, China has vowed to “fight to the end” against Trump’s escalating tariffs. (Capital Brief)
  
  

• As markets move quickly, here are some of the companies that are worth being across:
  - Tesla is now down 15% since Trump’s tariff announcement, with Elon Musk now getting into a fight with Trump’s trade adviser Peter Navarro (Quartz)
  - Australia’s resource companies are down. In the past week: Mineral Resources (down 30%), Pilbara Minerals (down 23%), Whitehaven Coal (down 21%), South32 (down 20%), Santos (down 19%) and Woodside (down 17%)
  - The wealth platforms were also smashed: Hub24 (down 17%) and Netwealth (down 13%)
  
  

• Resource companies are down because commodity prices are falling. Brent Crude, the benchmark oil price, fell to around $64 a barrel, down almost 14% from $74 before Trump announced his tariffs. (WSJ)
  
  

• Australia’s first leaders debate saw Anthony Albanese and Peter Dutton face off. Unfortunately it was all behind the Sky News and Daily Telegraph paywall, meaning viewership was low. Unsurprisingly, tariffs were the first topic before the leaders sparred on housing, cost-of-living, and funding for education and healthcare. (AFR)
  
  

• Westpac’s consumer sentiment survey shows Australian consumer’s feelings about the economy have fallen 6% in just a week since Trump announced his global tariffs. (Capital Brief)
  
  

• The new owner of Star Entertainment has said Australia’s casino giant will be cleaned out and have new management put in place. Chair of Bally’s Corporation Soo Kim told reporters, “We need to put different executives in there – this particular mix of executives have generated poor operating performance.” (AFR)
  
  

• In a spot of positive news for Australian companies, Guzman y Gomez reported 24% revenue growth for the latest quarter as sales increased in each of its four operating countries - Australia, Singapore, Japan and the US - as the company also said it expected to exceed its full-year profit forecast. (Capital Brief)
  
  

• The negotiations with Trump appear to have begun. Usrula von der Leyen, president of the European Commission, said that “Europe is always ready for a good deal” as she offered to scrap tariffs on American industrial goods in return for America doing the same. (Euronews)
  
  

• President Trump also confirmed that the US would hold high-level nuclear talks with Iran on Saturday. This will be the first time that the two countries have directly communicated since Trump pulled the US out of the Obama-era Iran Nuclear Deal in 2018. (BBC)

What the…?

One of the biggest losers of Trump’s trade war appears to be Apple. Based on its current supply chain, it is estimated that the US tech giant will be paying $40 billion a year in tariffs (for context: Apple’s profit last year was $94 billion).

Currently, the cheapest iPhone in America sells for $799. But under Trump’s tariffs it is estimated to cost $1,142. (Reuters)

Investing is a lifelong journey

Here’s what you can learn today.

Why has the S&P 500 gone up by so much?

This is an excerpt from our book Don’t Stress, Just Invest, winner of the Best Personal Finance and Investing Book at the Australian Business Book Awards.

Why has the S&P 500 gone up by so much?

Since Vanguard introduced the first index fund in 1976, new technology has taken the world by storm, global trade has opened new markets and incredible new companies have been created. Over time, some companies got bigger and others got smaller. 

And that is part of the genius of index funds. Every three months, the list of biggest companies is updated. Growing companies are added and shrinking companies are removed. That way, we don’t own the biggest companies from 1976. We own the biggest companies of today.

Here are some notable additions to the S&P 500 since 1976.

• Apple was added to the S&P 500 in 1982.

• Microsoft was added in 1994.

• Amazon was added in 2005.

• Netflix was added in 2010.

• Tesla was added in 2020.

And these are the companies that have pushed the S&P 500 higher and higher.

• Apple is up 105,000% since 1982.

• Microsoft is up 8,500% since 1994.

• Amazon is up 4,000% since 2005.

• Netflix is up 4,000% since 2010.

• Tesla is up 300% since 2020.

That is the beauty of a stock market index. Because it only tracks the biggest companies in a stock market, companies that are getting smaller get removed from the index and replaced with the growing companies that are bringing new products, technologies or ways of doing business to the world. This process of creative destruction keeps pushing the overall stock market index higher.

Want to take advantage of the current market downturn and get started investing? Pick up a copy of Don’t Stress, Just Invest wherever you buy books.

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