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

It helps to be up with the lingo when talking about the stock market.

Most of the time, it trudges along and rarely cracks a mention around the Sunday barbecue (unless Uncle Phil wants to let you in on a little action with a stock you’ve never heard of).

So, here’s what you need to know to be the smartest in the room (courtesy of our long-time Your Money columnist Rowan Jones of Entrust Wealth Management) ...

A pullback is the least severe and is regarded as a fall of between 5 and 10 per cent.

It is usually only temporary in nature. In most cases it is viewed as a short-lived setback in an otherwise still rising market. On average, the US share market has a 5 per cent-plus pullback three times a year.

A market correction is when the share market sees a fall of between 10 and 20 per cent.

As you would expect, corrections occur less frequently than a pullback. On average, the US market has one 10 per cent-plus correction a year.

If the market continues to slide and the losses exceed 20 per cent then it’s universally accepted we’ve officially entered into bear market territory. In the US a bear market occurs once every three to four years.

The carnage witnessed on the ASX200 over the past few trading days is in stark contrast to where we were just a few weeks ago.

The index hit all-time highs late last year and peaked again on Valentine’s Day (when everyone was still in love with Aussie stocks) to 8555.8 points.

It’s now down 10.8 per cent for the year so far and 6.1 per cent for the past six months.

For those desperate for a silver lining, it’s up 36 per cent since the start of the COVID-19 crisis back in 2020.

As the trade war heats up and iron ore falls on fears for China’s ability to maintain its ambitious growth agenda, miners of the steel making commodity are copping a beating.

Andrew Forrest’s Fortescue tumbled 8.8 per cent in the first hour of trade to $13.54 - a drop to lows last seen in the early stages of the coronavirus chaos.

Rio Tinto was down 6.3 per cent to $105.58 - levels not witnessed since mid-2023.

BHP took the biggest hit, down 9 per cent to $33.48 - lows last seen in later 2021.

Spot iron ore is nowtrading at $US98 a tonne.

President Donald Trump says he’s not intentionally fuelling a market selloff but gave no indication he’s preparing to claw back the tariff barrage that has wiped trillions in value from US equities.

Speaking to reporters aboard Air Force One after a weekend of golf in Florida, Trump said any deal to trim tariffs with affected nations must lead to the elimination of the US trade deficit.

“I don’t want anything to go down, but sometimes you have to take medicine to fix something,” Mr Trump said as US equity futures slumped and the yen surged in a sign of deepening turmoil from the tariffs.

Pepperstone head of research Chris Weston said Donald Trump and his Treasury Secretary Scott Bessent were playing a dangerous game, “especially when equity and corporate credit reflect increasing recession and default risk – relief to one’s debt serviceability matters little if you’ve lost your job”.

“Clearly, the longer the current tariff rates remain in place the greater the impact on inflation, and deterioration in business confidence and subsequently the higher the probability that Trump’s tariff policy will be seen as responsible for causing a US and possibly global recession,” Mr Weston said.

“While we’ve seen a number of (exporting) nations making moves to have their tariff rate taken down, the market is far more sensitive to news and moves that involve China, Europe, the UK and Japan,” he said.

In a sign of the times, there are just two companies among the 200 that make up the main index in Australia that are in the green.

The first is Challenger with a trend-busting rise of 10.7 per cent (but that is based purely on TAL Dai-ichi Life Australia buying a 15.1 per cent stake at a very healthy 53 per cent premium to its ast closing price).

The other is TPG, which managed to add 0.2 per cent.

After today’s bloodath, we’re counting that as a stunning win.

The ASX200 is now down more than 6 per cent - diving to 7193.6, or a spectacular 474 points down - in just 40 minutes of trade.

Just look at these numbers from the 11 sectors that make up the market:

1. Energy: down 8.3 per cent
2. Mining: down 7.4 per cent
3. IT: down 6.6 per cent
4. Banks and financials: 6.3 per cent
5. Utilities: down 6 per cent
6. Consumer discretionary: down 5.6 per cent
7. Real estate: down 5.5 per cent
8. Industrials: down 4 per cent
9. Heath care: down 4 per cent
10. Telcos: down 3.1 per cent
11. Consumer staples: down 3 per cent