ASX dives, following Wall Street’s slump as Trump doubles down on tariffs

Welcome to your five-minute recap of the trading day.

The numbers

The Australian sharemarket finished sharply lower on Tuesday after US President Donald Trump’s decision to push through tariffs on top trading partners tested Wall Street’s risk tolerances anew, sending bonds up and US stocks to their biggest loss of the year.

The S&P/ASX 200 closed down 47.6 points, or 0.6 per cent, at 8198.1, having slumped as much as 1.1 per cent during the session, making Monday’s 0.9 per cent rebound a short reprieve. The S&P/ASX 200 lost 4.2 per cent in February, its worst month in more than two years.

Wall Street tanked after Donald Trump confirmed he was pressing ahead with the tariffs for Canada and Mexico.Credit: Bloomberg

The lifters

Healthcare stocks were the only industry sector in the green, led higher by biotech giant CSL (up 1 per cent) sleep treatments maker ResMed (up 0.9 per cent) and hearing implant maker Cochlear (up 0.4 per cent) as investors were looking to defensive investments in the sea of red.

The laggards

The energy and utilities sectors led the falls, pulled down by a slump in oil prices overnight to their lowest level this year after the OPEC oil cartel and its allies affirmed plans to increase crude production from April.

The energy and utilities sectors ended down 3.3 per cent and 2.2 per cent, respectively, led lower by Woodside (down 3.1 per cent), Santos (down 4.7 per cent), and Ampol (down 1.9 per cent). The nation’s top energy utility Origin Energy lost 4.2 per cent as its stock went ex-dividend.

Tech stocks also tumbled, following a sell-off in the big US tech giants which sent a gauge of the so-called Magnificent Seven megacaps (which include the likes of Apple, Microsoft and Google) falling 3.1 per cent. Local tech companies followed, with Australia’s biggest tech stock WiseTech shedding 0.6 per cent, Technology One down 1.1 per cent and family tracking app Life 360 slumping 4.5 per cent.

Insurance stocks fell amid investor concerns over the potential impact of Cyclone Alfred, which is forecast to make landfall in southern Queensland later this week. QBE lost 2 per cent, as did Suncorp, and IAG dropped 1.7 per cent. Suncorp CEO Steve Johnston said there was uncertainty about the cyclone’s path and strength, but he urged customers to prepare.

The mining heavyweights were also under pressure after iron ore slumped 2.2 per cent overnight on fears the tariffs on China will hurt demand for Australia’s metals from the nation’s biggest export market.

Iron ore giants BHP, Fortescue Metals Group and Rio Tinto fell 0.3 per cent, 3.4 per cent and 0.2 per cent, respectively, having pared back some of their early losses, while lithium miners suffered bigger declines amid concern the tariffs will dent export sales of China’s lithium-ion batteries. Mineral Resources lost 10.2 per cent, IGO fell 3.4 per cent and Liontown Resources shed 4.6 per cent.

Meanwhile, the big four banks ended mixed after falls during most of the session. CBA, the biggest stock on the ASX, ended up 0.4 per cent, NAB fell 0.8 per cent, and ANZ dropped 0.5 per cent. Westpac edged up 0.2 per cent. Macquarie Group shed 1.2 per cent.

The lowdown

While the market’s focus was firmly on Donald Trump’s tariffs, investors also took in the RBA board’s minutes from its February meeting, when it cut interest rates for the first time in more than four years. The minutes showed that the central bank’s board members expressed caution about future policy easing, worrying that rapid moves could jeopardise inflation’s return to the 2.5 per cent midpoint of its target.

“Members agreed that their decision at this meeting did not commit them to further reductions in the cash rate target at subsequent meetings,” the minutes said.

But the main direction clearly came from America, where the S&P 500 lost almost 2 per cent as Trump said Mexico and Canada would be unable to negotiate a reprieve from tariffs taking effect on Tuesday. The White House said Trump signed an order to tariff China at 20 per cent, not 10 per cent.

Canada announced a sweeping package of levies in response and China retaliated by imposing tariffs on US soybeans and other farm products as the US tariffs set in. Investors are seeking safer havens as they become wary about rising geopolitical tensions and the prospect of tit-for-tat tariffs worsening the global trade spat.

“It’s time to be nervous,” said Callie Cox at Ritholtz Wealth Management. “Not bearish, but nervous. While there isn’t enough evidence to think we’re on the cusp of a deep pullback, the economy is changing quickly. The headlines are so unrelenting that people don’t know what to do. So they wait for a better signal.

Wall Street is coming off a rocky couple of weeks, starting after the S&P 500 set a record following a parade of fatter-than-expected company results. Then, the market dove sharply amid several weaker-than-expected economic reports, including a couple showing households are getting much more pessimistic about inflation because of the threat of tariffs.

US earnings estimates don’t fully reflect potential risks from President Trump’s proposed tariffs, according to Citigroup strategists led by Scott Chronert.

“Market anxiety levels have been dialled up, and we see traders having to react aggressively and dynamically,” wrote Chris Weston, head of research at Pepperstone Group, in a note.

“Either way, volatility in markets is on the rise, and we need to be prepared for headlines to break at any moment.”

with AP, AAP, Bloomberg

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