Market wrap: ASX200 falls for second consecutive session on escalating trade war fears

The Australian sharemarket booked a second consecutive day in the red on Wednesday as escalating global trade tensions continued to rattle investors.

The ASX200 fell sharply on the March 5, 2025 trading day. Picture: NewsWire / Max Mason-Hubers

Escalating global trade tensions pushed the Australian sharemarket sharply lower for a second consecutive session on Wednesday as investors confronted the prospect of an extended and combative tariff war.

The benchmark ASX200 tumbled 57 points, or 0.7 per cent, to close at 8141.1, while the broader All Ordinaries index fell 57.8 points, or 0.69 per cent to 8363.1.

The sell off was broadbased, with nine of 11 industry sectors ending in the red, propelled by consumer staples with a hefty 3.56 per cent decline.

Supermarket giant Woolworths retreated 3.91 per cent to $28.72 a share, Coles fell 4.35 per cent to $18.89 and conglomerate Wesfarmers lost 0.79 per cent to $74.16.

Financials also pulled the market lower, with Commonwealth Bank sliding 0.87 per cent to $156.39, NAB losing 1.43 per cent to $34.55, Westpac falling 1.04 per cent to $31.54 and ANZ retreating 0.88 per cent to $29.36.

The bourse’s tumble followed a rough session on Wall St overnight on Tuesday, with rising concerns about a slowing US economy and the announcement of reciprocal tariffs on US goods sparking a rout in equities.

The Dow Jones lost 670 points, or 1.55 per cent, to 42,520 points, while the S&P 500 index shed 71 points, or 1.22 per cent, to 5778.

The tech-heavy Nasdaq slipped 0.35 per cent to 18285.

The ASX200 fell 0.7 per cent on Wednesday. Picture: NewsWire / Max Mason-Hubers

US President Donald Trump’s imposition of tariffs on Canada, Mexico and China have triggered a response, with Mexican President Claudia Sheinbaum announcing she would impose tariffs on the US this weekend.

Canadian Prime Minister Justin Trudeau slapped a 25 per cent levy on American products and China retaliated with additional tariffs of up to 15 per cent.

“We can expect darker days ahead for global markets now the US has commenced trade wars with China, Canada and Mexico,” Moomoo market strategist Jessica Amir said.

“And we await the imposition of tariffs on imports of all computer chips into the US. That’s scary.”

IG markets analyst Tony Sycamore said growing cracks in the US economy were also spooking investors.

“It (the trade war) is happening against the backdrop of a US economy showing definite signs of cracks appearing,” he said.

“We saw a lot of consumption brought forward to beat the tariffs … we’re seeing uncertainty around inflation and tariffs, but it’s also in regards to the Department of Governmental Efficiency.

“Those cuts are so aggressive and that has dented confidence as well.”

Energy stocks tumbled on Wednesday on reports OPEC would proceed with output increases in April, with the price of Brent crude dipping 0.81 per cent overnight on Tuesday to $71 a barrel.

Woodside Energy lost 1.47 per cent to $24.12 and Santos declined 1.57 per cent to $6.25.

Consumer staples businesses like Woolworths fell sharply in Wednesday’s trading. Picture: NewsWire/ Gaye Gerard

Fresh stimulus measures announced at the National People’s Congress in China helped lift the big miners, with BHP rising 0.15 per cent to $39.54 and Rio Tinto gaining 0.27 per cent to $117.50.

But Fortescue fell 1.36 per cent to $15.93.

“We’ve seen some bond issuance, which was kind of expected,” Mr Sycamore said.

“We always knew there was going to be some bond issuance and a slight expansion of fiscal policy to combat tariffs and the slowing Chinese economy.

“The market is running with it and excited by it but I don’t think this is anything that is unexpected, but it has brought some support into the mining stocks.”

In corporate news, clothing company KMD Brands announced its incoming CEO Brent Scrimshaw would begin leading the company from March 24.

Stock in KMD, which owns the Rip Curl and Kathmandu brands, lifted 1.45 per cent to 35c.

The Aussie dollar lost 0.35 per cent to buy US62.5c at the closing bell.

The top gainer on the ASX200 was West African Resources, which leapt 6.49 per cent to $1.88.

The largest laggard was Treasury Wine Estates, sliding 5.58 per cent to $9.97.