ASX RECAP: Updates from the Australian share market as Donald Trump’s tariffs wreak havoc

Modelling of the impact of Donald Trump tariffs announced by the Department of Treasury has found the impact on Australia should be “modest” and will result in a reduction in output and an increase in inflation in the short term.

According to the modellling, requested by Treasurer Jim Chalmers on Thursday, the tariff shock - including China’s retaliation - will lead to a 0.1 per cent decline in Australian GDP and a 0.2 percentage-point increase in inflation in 2025, relative to a scenario with no new tariffs.

Over the medium term, Australia’s GDP is permanently lower, Treasury said, while the inflationary impact is temporary.

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Opposition Leader Peter Dutton has used the ASX bloodbath as an opportunity to spruik the Coalition’s economic management skills.

“In uncertain times, our country needs strong economic management,” Mr Dutton wrote on X, addressing the global hit to markets.

“The Coalition has the proven track record for handling global shocks – from September 11 to COVID.

“Ahead of the Global financial crisis, the Coalition delivered 10 surpluses and paid off all Commonwealth debt.

“Before Covid, the Coalition tackled Labor’s reckless spending to balance the budget.

“Just over a week ago, in their fourth budget, Labor announced 10 straight years of deficits. This has to change - for this generation and the next.

“In this campaign, the choice is about who can better manage our economy to help you get ahead.

“That is the plan I’m putting on the table, it’s our plan to get Australia back on track.”

Capital.com senior financial market analyst Kyle Rodda says this morning’s market chaos was borne out of panic.

“The markets are set for an ugly start to the week after the panic gripping Wall Street deepened on Friday night.

“We’ve had the first tat to the US’s tit, with China announcing retaliatory tariffs on the United States – something the US has threatened would only invite even higher tariffs,” Mr Rodda said.

“The firing gun for the race to the bottom on global trade has been fired and market participants are hoping that it will be a false start and the whole event will eventually be called off.”

Aussie investors asre short-selling markets in the UK, the European Union and Australia, Westpac economist Ryan Wells said.

“Stock market volatility spiked at a new post-pandemic high as the historic sell-off in global equities persists,” Mr Wells wrote in a research note.

IG Markets analyst Tony Sycamore said China’s response was making everyone nervous.

“The sell-off in US stock markets has intensified this morning after China retaliated on Friday night,” Mr Sycamore said.

This had sparked “fears of a full-blown trade war, imminent recession, and a liquidity crunch last seen during the COVID crash of 2020”, he warned.

US President Donald Trump has addressed the global market bloodbath, saying he doesn’t ‘want anything to go down’ but claimed sometimes you need to ‘take medicine’.

While onboard Air Force One, Mr Trump was asked if there was a threshold of pain that he would not tolerate for the markets.

“I think your question is so stupid,” Mr Trump said.

“I don’t want anything to go down, but sometimes you have to take medicine to fix something — and we have been treated so badly by other countries.”

Mr Trump said the US was in this position because the country had “stupid leaders that allowed this to happen”.

“They took our businesses, they took our money, they took our jobs,” Mr Trump said.

“They moved it to Mexico, they moved it to Canada they moved a lot of it to china. It’s not sustainable. We’re not going to do it.”

Mr Trump claimed markets would soon straighten out and that the United Stated would be “strong again”.

Japanese Prime Minister Shigeru Ishiba says his government will continue to ask US President Donald Trump to lower tariffs against Japan, but admits results “won’t come overnight”.

“As such, the government must take all available means” to cushion the economic blow from US tariffs, such as offering funding support for domestic firms and taking measures to protect jobs, Ishiba told parliament on Monday.

Ishiba said Trump’s decision to slap tariffs on imports from Japan was “extremely disappointing and regrettable”, adding that Japan would continue to explain that it had done nothing unfair to the United States.

Ishiba also said he was willing to visit the US for a meeting with Trump as soon as possible.

“But in doing so, we must ready a package of steps on what Japan could do,” he added.

Trump’s decision to slap a 25 per cent levy on auto imports, and a reciprocal 24 per cent tariff on other Japanese goods, is expected to deal a huge blow to Japan’s export-heavy economy with analysts predicting the higher duties could knock up to 0.8 per cent off economic growth.

AAP

Taiwan’s main index has plunged to its worst day on record, minutes after reopening following a holiday break.

The Taiex index shed 9.8 per cent on Monday, following the global trading rout instigated by Donald Trump’s tariff plan.

While seminconductors are spared tariffs, for now, Taiwan’s largest company by market capitalisatin, Taiwan Semiconductor Manufacturing, has plunged by 10 per cent, hitting the exchanges daily loss limit.

Asian trading has been similarly hit with the Hong Kong based Hang Seng down 9.26 per cent, and stocks in Shenzhen down 6 per cent. Japan’s Nikkei is down 5.7 per cent.

Peter Dutton has argued in a time of global uncertainty, the Coalition would be the best economic managers for Australia.

“It’s a really troubling time for Australians, and particularly those who are looking to retire in the not-to-distant future, where they’ve got equities and they’ve got investments in the share market,” he said while speaking in Adelaide on Monday.

“They want a government at the Federal level who can manage the economy world and it’s only a Coalition Federal government that can do that.”

Early jitters have eased, with some traders taking advanatge of the horror show at the open - when stocks fell more than 6 per cent - to buy back in on the cheap.

Even stilll, the market was still down almost 4 per cent to 7369.6 points at 9.55am.

Challenger was still up more than 7 per cent to $5.93 following a 15.1 per cent buy-in on its register at a premium price from a new startegic partner.

Joining the investment manageent company in the top five winners list (albeit with ony fractional gains) are Lifestyle Communities (up 1.3 per cent to $7.20), Lynas Rare Earths (up 0.8 per cent to $7.37), Reece (up 05 per cent to $14.30) and TPG (up 0.3 per cent to $4.76).

Woodside Energy has revealed Stonepeak will invest $US5.7 billion ($9.5b) in its proposed Louisiana LNG export facility, advancing the project toward a final investment decision.

Partnering with Stonepeak is a shot in the arm for Louisiana LNG, after Woodside chief executive Meg O’Neill said during CERAWeek by S&P Global conference in March that a decision on the project would come soon.

The infrastructure investment fund will hold 40 per cent of equity in Louisiana LNG Infrastructure.

Woodside will remain operator of the project. Ms O’Neill has previously said that other partners would be brought in to provide equity to the project, as the US maintains its position the world’s largest exporter of the fuel.

“We will continue advancing discussions with additional potential partners targeting an equity sell-down of around 50 per cent in the integrated project,” Mr O’Neill said on Monday.

The announcement comes even after one of the worst declines in financial markets after President Donald Trump announced widespread tariffs. Woodside’s investment in the project would amount to billions to complete the Louisiana LNG site.

Woodside’s shares were down 7.4 per cent at 9.50am to $18.92 - down 18.9 per cent for the past five trading sessions.