Australian share market claws back ground to close 0.9 per cent lower amid US recession fears

A counterattack that recovered half of the Australian share market’s early losses has investors hoping for a breather from a global rout that has wiped 4 per cent from the value of local shares in the past week.

Having crashed 1.8 per cent on Friday, the S&P-ASX200 tumble repeated the loss in early trading on Tuesday before stabilising and clawing back ground to close 0.9 per cent lower at 7890.1 points as US stock futures turned positive.

Investors have become increasingly nervous about US President Donald Trump’s barrage of supposedly business-friendly policies, and the jitters intensified when he refused on the weekend to rule out a recession as the world’s biggest economy digests his tariffs and government spending cuts.

After the tech-heavy NASDAQ Composite lost 4 per cent and the S&P500 2.7 per cent, local stocks inevitably were pummelled, with the S&P-ASX200 plunging to a fresh seven-month low of 7818.3 points.

Technology was the biggest loser, tracking the overnight US falls, losing 4 per cent, as just three of the ASX’s 11 sectors finished in the green.

The barometer closed at 7890.1 and has now lost 4.2 per cent over its past seven trading sessions, with tech and energy down more than 7 per cent.

Pepperstone senior research strategist Michael Brown said Mr Trump was “for now, doubling down on the idea of ‘short term pain, for long term gain’, in the hope” that the fallout was blamed on the Biden administration and that “Trump & Co will be able to claim credit for the economic, and market, turnaround that would likely follow”.

“However, in the short-term, it remains difficult to advocate buying dips, with the bear case holding more weight for me, as growth expectations continue to slide, dragging earnings expectations lower alongside, all the while policy uncertainty clouds the outlook,” he said.

Just 26 of the ASX200 companies have recorded gains since March 3, including WA goldminers West African Resources (18 per cent), Bellevue Gold (5.5 per cent) and Gold Road Resources (0.4 per cent).

Among the State’s heavyweights, however, South32 is off 1.1 per cent for the period, Wesfarmers 4.7 per cent, Fortescue 6 per cent and Woodside 8.2 per cent.

Investment bank Citigroup reflected the changing global mood on Mr Trump’s administration by downgrading US stocks to neutral and raising China to overweight, saying the US economy may no longer outpace the rest of the world in the coming months.

Chinese stocks have been on a tear this year, partly thanks to the emergence of an artificial intelligence model from DeepSeek that is seen challenging the US dominance in the sector.

“In the big picture, US equity outperformance may well return when the Ai narrative takes over again, but in the coming months, we expect US growth momentum to undershoot the (rest of the world),” Dirk Willer, Citi’s global head of macro, asset allocation and emerging market strategy, said.

More than $US4 trillion has now been wiped from S&P500 since last month’s record high, with the 8.6 per cent loss approaching the 10 per cent that represents a correction.

Investors have been spooked by the inferences from the Trump camp that the new administration is prepared to push the US into recession to achieve its tariff goals and government workforce cuts.

That’s been a wake-up call for those who had welcomed his ascension on the belief that his pro-growth agenda of tariffs, lower taxes and reduced regulation would benefit shares.