Investors are becoming uneasy about the ASX 200 due to Donald Trump’s rhetoric about tariffs and the danger of a trade war.
Following the overnight collapse of US markets due to recession fears, the Australian share market has crashed, losing over $45 billion.
The benchmark S&P/ASX200 began Tuesday’s session on a high note and fell more than 140 points, or around 1.79%, to 7820.1.
The overall All Ordinaries index fell 156.4 points, or around 1.9%, to 8035.3 points.
In the first half of the trading day, the main index’s market value dropped by as much as $45 billion from Monday’s closing of $2.6 trillion.
Donald Trump’s intermittent tariffs have increased investor apprehension at a time when the world’s largest economy’s growth prospects are under scrutiny.
According to Steven Daghlian, a CommSec market analyst, “the market is reacting to a number of factors at the moment, but things like concerns of Trump’s tariffs, that this could trigger an economic slowdown.”
“The trade war’s unpredictable nature had a significant impact on markets last week.”
Trump was unable to predict on Sunday if his protectionist measures will cause the US to enter a recession and for global markets to tremble, especially in the aftermath of lower-than-expected US jobs and inflation numbers.
By Monday, China would impose retaliatory duties on a number of US imports. In order to prevent a government shutdown, the US Congress is rushing to approve a budget plan.
On Wall Street, the tech-heavy Nasdaq Composite fell 726.01 points (3.99%) to 17,470.21, while the S&P 500 shed 155.21 points (2.69%) to finish at 5,614.99 points. At 41,911.09, the Dow Jones Industrial Average dropped 890.63 points (2.08%).
The so-called “Magnificent Seven” stocks—Amazon, Apple, Meta, Alphabet, the parent company of Google, Microsoft, Nvidia, and Tesla—all saw stock declines of more than 5% as a result of the tech sell-off.
About one-third of the US share market is made up of IT stocks, and in February, the Magnificent Seven alone had a combined worth of US$18 trillion (A$29 trillion), which was more than the GDP of all countries save the US and China.
“You know that’s obviously a risk when you have seven stocks that are so big and have such a significant weight on an impact on the broader market,” Daghlian stated.
The local stock exchange saw losses in all 11 Australian sectors, with IT companies leading the way with a 4.9% decline.
Financials and the resource sector, which together make up over half of Australia’s share market by firm size, saw declines of 1.7% and 2.0%, respectively.
By lunchtime, industrial, real estate, and health care stocks had all dropped more than 1%, while consumer discretionary stocks had dropped more than 2%.
The Australian stock market fell almost 8.1% after hitting a record high of 8615 on February 14.