The Australian sharemarket notched its biggest one-day loss in five years on Monday as equities around the world tumbled after China retaliated against US tariffs, escalating the trade war that risks a global recession.

The benchmark S&P/ASX 200 Index dived 324.5 points, or by 4.2 per cent, to 7343.3 points, it’s largest one-day loss since May 2020 as investors erased $96.6 billion in value. There was some buying on the day helping the gauge to recover from a slump of as much as 6 per cent at the open.

The All Ordinaries retreated 4.1 per cent as the sharemarket tracked a heavy sell-off on Wall Street on Friday. US stock futures are pointing to more heaving selling of as much as 4 per cent on Monday night (AEST).

‘Few winners’

“There are few equity market winners from a trade war,” Betashares chief economist David Bassanese said. “At a sector level, there has been a notable rotation, with traditional defensive outperforming cyclicals … while companies with high supply chain exposure to Asia have been hit hard.”

Asian stocks plummeted after China retaliated against the President Donald Trump’s tariffs with an additional 34 per cent levy on goods from the US. That is ahead of America’s country-specific reciprocal tariffs coming into effect on Wednesday.

“For now it’s a wait and see and many just can’t understand why Trump does not see the carnage he has created on Wall Street,” said Richard Coppleson from Bell Potter. ” If this continues then that raises the serous chance then of a US recession.”

The S&P 500 is now trading well in correction territory, extending its losses from its recent high to 15.3 per cent. The flight from risk assets sent bitcoin below $US77,000 near 4pm – an 8 per cent drop. Even gold, often seen as a safe haven in times of market stress, slipped 0.4 per cent.

All 11 ASX sectors finished in the red, with miners and banks weighing on the bourse.

Index heavyweight BHP dived to November 2021 lows, closing at $34.57, while Commonwealth Bank dropped 6.2 per cent to $144.41. Utilities, communications and consumer staples stocks – often seen as defensive owing to year-round demand for services – posted more modest losses.

Stocks in focus

But energy stocks were the most heavily sold after Saudi Arabia slashed its flagship crude price. Global benchmark Brent fell 2.6 per cent below $US64 a barrel near 4pm – a four-year low. Santos sank 9.8 per cent to $5.37 and fellow oil and gas producer Woodside 5.8 per cent to $19.25. Petrol producer Ampol plunged 7 per cent to $21.01.

Miners retreated after iron ore contracts in Singapore plunged below $US98 a tonne on fears of weaker demand for the steelmaking commodity. Mineral Resources was off 11.8 per cent to $16.72 and Fortescue 3.6 per cent, at $14.32. Not even gold miners escaped the sell-off, with Evolution Mining plunging 7.9 per cent to $6.44.

In corporate news, Abacus Storage King rallied 20.7 per cent to $1.40 after its majority investor Ki Corporation and NYSE-listed Public Storage lobbed a proposal to buy the company’s remaining stake for $1.47 a share.

Challenger jumped 8.3 per cent to $6 after it announced life insurer TAL Dai-ichi Life would acquire a 15.1 per cent stake.

Telix Pharmaceuticals posted a modest loss, down just 2 per cent to $23.15, after saying it didn’t expect “any material impact” on its business or supply chain as a result of the US administration’s tariffs on imports.