ASX loses more than $50b in two days as Trump’s tariffs kick in

The Australian sharemarket accelerated its sell-down on Wednesday, taking its losses over the past two sessions to more than $50 billion, after US President Donald Trump ruled out exempting Australia from America’s 25 per cent tariffs on aluminium and steel.

The S&P/ASX 200 finished down 103.90 points, or 1.3 per cent, at 7786.20, having plunged as much as 1.9 per cent earlier in the afternoon as the new tariffs took effect, affecting almost $1 billion worth of the nation’s exports. The slump briefly took the bourse’s fall from its all-time high last month to more than 10 per cent, which is deemed a market correction.

AMP chief economist Shane Oliver warned there may be more pain ahead. “It’s still too early to say markets have bottomed,” he wrote in a note to clients. “We continue to see a high risk of a 15 per cent plus correction,” he added, though share pullbacks could also offer investment opportunities.

Wall Street’s benchmark index at times entered correction territory, setting the scene for the sell-down in Australia.Credit: Bloomberg

The broad losses came after another wild day on the US market, where Trump’s latest ramp-up in his trade war also at times pulled Wall Street 10 per cent below its record from last month. Stocks began tumbling in the morning in New York after Trump threatened to double planned tariff increases on steel and aluminium from Canada. They recovered before sliding again into the close.

Australia, along with other major steel and aluminium exporters, has spent the past month pressing Trump to grant an exemption on the tariffs. Asked why he had decided against the carve-out, White House press secretary Karoline Leavitt indicated there were no exemptions across the board.

Materials stocks including the mining heavyweights that are selling iron ore – the raw ingredient for steel – declined. BHP, the world’s largest miner, shed 1.8 per cent, as did its smaller rival Rio Tinto. Mining explosives maker Orica shed 1.3 per cent even as the company said it would buy back up to $400 million of its shares to boost investor returns.

Industrial stocks also fell, led lower by a 2.6 per cent fall in pallet-maker Brambles, whose shares traded for the first time without the right to its latest dividend. (Other shares trading ex-dividend during this session included Westpac and Breville.)

Financial stocks, which together with the materials account for more than half of the ASX, declined across the board amid concerns how the tariffs will weigh on the Australian economy. The big four banks all declined more than 2 per cent at some point, with Commonwealth Bank, the nation’s biggest lender and the biggest stock on the ASX, finishing down 1.4 per cent. Westpac ended 2 per cent lower while National Australia Bank and ANZ both lost 2.1 per cent.

Stocks dependent on discretionary consumer spending posted the biggest declines, with Bunnings, Officeworks and Kmart owner Wesfarmers down 2.6 per cent, electronics retailer JB Hi-Fi losing 1 per cent and furniture and white goods seller Harvey Norman 1.2 per cent weaker.

Companies with significant exposure to the American market also saw their shares punished. Building product manufacturer James Hardie, which makes most of its profits in the US, lost 2.6 per cent. Biotech giant CSL, which generates about half of its sales there, weighed on the healthcare sector as it edged down 0.6 per cent, while Treasury Wine Estates, which in recent years pivoted to the American market after China’s tariffs on Australian wine, declined 2.5 per cent.

There was “a fair bit” of fear and uncertainty triggered by America’s escalating tariffs, said Adam Dawes, senior investment advisor at Shaw and Partners. “That’s really what’s moving the entire market because we don’t know what’s going to happen tomorrow.”

“There’s too much uncertainty out there, hence why no one is stepping in to buy at the moment.”

Elon Musk’s Tesla rose by 3.8 per cent after Donald Trump said he would buy a Tesla in a show of support for “Elon’s baby”. Credit: AP

On Wall Street overnight, the market’s slide was erratic and dizzying. The S&P 500 fell 0.8 per cent, but only after careening between a modest gain and a tumble of 1.5 per cent.

Other indexes likewise swung sharply through the day. The Dow Jones lost 1.1 per cent, and the Nasdaq composite ended up slipping 0.2 per cent.

Such head-spinning moves are becoming routine in what’s been a scary ride for investors as Trump tries to remake the country and world through tariffs and other policies. Stocks have been heaving mostly lower on uncertainty about how much pain Trump is willing for the economy to endure to get what he wants.

Trump has acknowledged the world’s largest economy could feel some “disturbance” because of the tariffs he’s pushing. Asked on Tuesday just how much pain Trump would be willing for the economy and stock market to take, right about when the market was nearing its lows for the day, Leavitt declined to give an exact answer. But she said earlier in a press briefing that “the president will look out for Wall Street and for Main Street”.

For his part, Trump said earlier on social media, “The only thing that makes sense is for Canada to become our cherished Fifty First State. This would make all Tariffs, and everything else, totally disappear.”

with AP

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