The Australian share market has recorded its biggest one-day fall in almost five years, wiping $100bn from local stocks as fears of a full-blown trade war and global recession spooked investors. The benchmark S&P/ASX 200 sank more than 4% to close at 7,343 points, its steepest drop since the Covid-19 pandemic roiled financial markets.
Monday's sell-off follows the sell-off last week after Donald Trump announced his 'liberation day' tariff plan, and intensified after major economies including China and the EU announced retaliatory tariffs. The ASX initially dropped more than 6% before trimming some losses, but the bounce failed to impress fund managers.
'It's a bloodbath on the share market today in Australia,' said Luke McMillan, head of research at Ophir Asset Management. He noted the market action resembled falls during the pandemic and global financial crisis, but added: 'The key difference is that this one is started by one person, essentially – being the US president.'
Omkar Joshi, chief investment officer at Opal Capital Management, said the escalation in trade tensions was weighing on markets. 'If we have a situation where no one backs down and we see more retaliation from both sides, it gets trickier and there's every possibility that we do continue to go lower from here,' he said. 'I don't think the Trump administration is going to back down quickly or in any meaningful manner.'
The Australian dollar also fell to its lowest level against the US dollar since the pandemic, dropping below 60 US cents for the first time since April 2020. It also hit pandemic-era lows against the euro and pound. A handful of listed resources companies involved in critical minerals, such as Lynas Rare Earths, were among the few stocks to gain as investors bet on demand from China's export controls.
