Markets have been in freefall since the Trump tariff announcements last week. The fallout is expected to continue on the ASX today, with futures trading overnight losing more than 4% and pointing to a $110 billion wipeout when trade begins today.
The perplexing ‘liberation day’ tariffs, meanwhile, continue to liberate Americans from their money, with Wall Street tumbling a staggering US$9 trillion in just two days – more than 10% – and nobody is sure where the bottom is.
China retaliates
Investors around the world are bracing for what now looks like a full-blown trade war and ensuing recession, with China now confirming it will retaliate with a raft of tariffs on US goods.
The Dow Jones fell more than 5%, while the S&P 500 dropped 6% – its largest single-day fall since March 2020.
The Nasdaq entered bear market territory, crashing nearly 6% and closing over 22% below its December peak.
Market volatility surged, with the VIX index hitting its highest level since the early months of the COVID-19 pandemic.
The sell-off was widespread. Understandably, financials and energy sectors were hit particularly hard, as prospects of weaker economic growth and lower interest rates weighed on bank margins.
Energy stocks slumped on the back of a steep decline in crude oil, which fell more than 7% to three-year lows on fears of a looming recession.
European markets, unsurprisingly – given the tariffs’ expected impact on global trade flows – mirrored Wall Street’s sharp losses.
Major indices across the continent closed around 5% lower, led by banks and industrials.
Bond markets rallied as investors sought safety. US Treasury yields fell to multi-month lows, with the benchmark 10-year note closing at 4%.
The two-year yield also slid, reflecting tempered expectations for near-term interest rate cuts by the US Federal Reserve.
Currencies and commodities
Currency markets were volatile, with the Australian dollar slipping below 61 US cents and the Euro and British pound also losing ground against a strengthening US dollar. The yen weakened modestly.
Commodities were broadly lower.
Base metals plunged, with futures for copper – the bellwether metal – logging their steepest daily fall since 2020.
Aluminium also declined. Gold prices eased despite the market turbulence, as investors sold to cover margin calls.
Iron ore prices slipped in response to concerns that tariffs could dampen Chinese steel demand.