Trump dump: shares track US plunge over recession fears

The Australian share market has plummeted, shedding more than $45 billion after US markets tanked overnight on recession fears.

The benchmark S&P/ASX200 dropped more than 140 points, or about 1.79 per cent, to 7820.1, after jumping off a cliff at the start of Tuesday’s session.

The broader All Ordinaries index was down about 1.9 per cent, or 156.4 points, to 8035.3 points.

The main index lost as much as $45 billion in market value, from Monday’s close of $2.6 trillion, in the first half of the trading day.

US President Donald Trump’s on-again, off-again tariffs have fanned investor uncertainty at a time when the growth outlook of the world’s largest economy is being questioned.

“The market’s reacting at the moment to a number of factors, but things like concerns of Trump’s tariffs, that this could trigger an economic slowdown,” CommSec market analyst Steven Daghlian told AAP.

“The unpredictability of the trade war was something that really weighed on markets last week.”

On Sunday and in the wake of weaker than expected US jobs and inflation data, Mr Trump could not say if his protectionist policies could lead the US into a recession, sending shockwaves through global markets.

China’s retaliatory tariffs on select US imports are set to take effect by Monday.

At the same time, the US Congress is scrambling to agree to a spending bill to avoid a government shutdown.

On Wall Street, the S&P500 lost 155.21 points, or 2.69 per cent, to end at 5,614.99 points, while the tech-heavy Nasdaq Composite lost 726.01 points, or 3.99 per cent, to 17,470.21. The Dow Jones Industrial Average fell 890.63 points, or 2.08 per cent, to 41,911.09.

The tech sell-off impacted the so-called ‘Magnificent Seven’ stocks of Amazon, Apple, Meta, Google owner Alphabet, Microsoft, Nvidia, and Tesla, all down more than 5 per cent.

Tech stocks account for roughly a third of the US share market, and the Magnificent Seven alone had a combined valuation of $US18 trillion ($A29 trillion) in February, greater than the GDP of any nations except the US and China.

“When you have seven stocks that are so large and have such a significant weight on an impact on the broader market, you know that’s obviously a risk,” Mr Daghlian said.

All 11 Australian sectors on the local bourse were in the red, led by IT stocks which fell by 4.9 per cent.

The resource sector and financials, which account for more than half of Australia’s share market by company size, were down 2.0 per cent and 1.7 per cent respectively.

Consumer discretionary stocks fell more than two per cent, while industrials, real estate and health care stocks were all down more than one per cent by midday.

The Australian share market slumped about 8.1 per cent from reaching an all-time-high of 8615 on February 14.

“Yes, we’re down heavily, but this is after record highs just weeks ago,” Mr Daghlian said.

The Australian dollar was buying 62.68 US cents, down from 63.16 on Monday afternoon.