Oil, iron ore slump drags ASX heavily into the red

The ASX resumed its sell-off on Wednesday with investors selling off the major miners as commodity prices slump.

The carnage on the ASX 200 resumed on Wednesday with the crude oil falling to covid prices and iron ore slumping to a fresh seven-month low as the US President Donald Trump’s tariff policy took effect.

The benchmark ASX 200 index closed sharply lower on Wednesday down 135.00 points or 1.80 per cent to 7,375.00 points. The Index has now lost 7.05 per cent over the last five trading days.

The broader All Ordinaries also sank 142.70 points or 1.85 per cent to 7,561.70.

The Australian dollar rose during Wednesday trading to 59.96 US cents.

10 of the 11 sectors finished in the red. Photo: Gaye Gerard / NewsWire

It follows a dramatic day on global markets, with Asian equities plummeting on tariff imports coming into at 2pm Australian time.

Australian shares initially rose slightly on the news but fell significantly within the hour.

Zenith Investment Partners head of asset allocation Damien Hennessy said it was the equivalent of a $700bn tax shock, equivalent to roughly 2.6 per cent of household incomes.

“Inflation is the first casualty, with core inflation expected to rise from 2.2 per cent to above 4 per cent, well beyond the U.S. Federal Reserve’s 2 per cent target.

“Growth projections are equally sobering: U.S. GDP could lose up to 1.5 percentage points, potentially dragging growth close to zero and flirting with recession.”

Part of these tariffs will see China face an additional 84 per cent tariff hike, putting Trump’s tariffs on all Chinese imports at 104 per cent. Including levies on certain products from the Biden administration, the total cost of tariffs is an estimated 125 per cent.

Ten of the 11 sectors ended in the red with only utilities rising 0.22 per cent on an overall day to forget for the ASX.

ASX plummeted for a second day, with nearly 50 billion dollars wiped off the Australian stock market today, as a result of fears US President Donald Trump’s reciprocal tariff policies. Photo: Gaye Gerard / NewsWire

Energy stocks, materials and health care all plunged by more than 3.5 per cent on Wednesday.

The price of oil briefly slipped below $US60 a barrel, for the lowest price since covid lockdowns in 2021, while iron ore slumped to a seven month low of $US93 a tonne.

Woodside Energy fell 3.72 per cent to $19.15, Santos retreated 5.65 per cent to $5.34 and Beach Energy slipped 4.94 per cent to $1.16.

The major iron ore miners also finished heavily in the red with BHP shed 3.45 per cent to $34.16, Rio Tinto fell 5.01 per cent to $103.99 and Fortescue Metals slumped 4.18 per cent to $14.20.

Market darling CSL was also hammered by tariff jitters after Mr Trump announced “major tariffs” were coming to the pharmaceutical sector shortly.

CSL traded heavily in the red, down 4.96 per cent to $233.62.

VanEck deputy head of investment capital markets Jamie Hannah said there were not a lot of positive stories on the ASX during Wednesday’s trading.

“Look, there isn’t a great deal of safety at the moment across the market,” he said.

“Shares are certainly volatile at the moment, bonds, they’re also volatile at the moment.”

“Commodities have also been falling a little bit over the past couple of days. Gold’s always been somewhere where people have parked money in times of uncertainty.”

“Unfortunately, gold’s also had an extraordinary rally over the past couple of months, as everyone’s been buying gold, so it’s pulled back a little bit off its highs.”

The biggest loser on the benchmark ASX200 was Champion Iron slumping 14.16 per cent to $3.940 and Nickel Industries which also slumped more than 14 per cent to $0.425.

The top gainer was Healius Limited which traded 4.47 per cent higher to $1.40 and Bapcor which is up 3.278 per cent to $4.41.