Donald Trump tariffs: It’s another bloodbath on ASX200 after worst day for US stocks in almost five years

Aussie investors are in for another horror day on the local share market, with the leading index opening sharply lower following a tariff-induced bloodbath in the US overnight.

The second day of the selloff on Australia’s S&P-ASX200 was sparked by the largest one-day percentage losses on US markets since 2020 — fuelled by fears President Donald Trump’s sweeping tariffs are about to upend the global economy and drag his country’s economy into recession.

The S&P-ASX200 plunged almost 2 per cent in the opening minutes on Friday to 7705.6 points — down 155.10, and well off all-time records above 8550 hit in mid-February.

It later recouped some of those losses but was still down 1.4 per cent near mid-session.

Energy stocks were among the bloodiest casualties as they followed a drop in the oil price — both down almost 6 per cent. IT stocks tumbled almost 5 per cent and utilities were off 3 per cent. The mining sector staged a rally after an early rout of more than 5 per cent to recover to a loss of just over one per cent.

Only four of the market’s 11 sectors managed to escape the carnage and eke out small gains — telcos the best performers with a one per cent jump.

Just two of the index’s 200 companies notched gains — Capricorn Metals and Ansell, which were both up about 1.5 per cent.

Home appliances manufacturer Breville Group — which currently makes 90 per cent of its products, by value, in China and sells almost half of it into the US — extended Thursday’s 5 per cent loss. Its stock was the worst performer, down 10 per cent at $26.89.

Among the big miners, Fortescue dropped 2.7 per cent, Rio fell 3 per cent and BHP shed 2.4 per cent.

The big four banks were also lower, with ANZ the laggard as its stock plummeted almost 3 per cent.

Recession fears rumble shell-shocked US

A combined $US2.4 trillion ($3t) in stock market value was wiped off S&P500 companies in the US overnight as the benchmark took a savage beating from nervous traders.

The Dow Jones Industrial Average had also not had a worse one-day collapse since June 2020, dropping more than 1680 points — nearly 4 per cent.

The Nasdaq Composite posted its largest percentage decline on any day since the COVID-19 pandemic sent global markets into a tailspin in March 2020.

As much as $55 billion was wiped from Australian stock values in early trading on Thursday — just hours after Mr Trump’s made his so-called “Liberation Day” address at the White House — with the sharp local losses mirrored on other regional share markets.

The S&P-ASX200 lost as much as 2.1 per cent before halving its losses to close 0.94 per cent lower at 7859.7 points.

While Mr Trump levied the baseline 10 per cent tariff on Australia, investors are fearful of the fallout on the local economy from higher US levies on Australia’s major trading partners, notably China, which has been hit with a new 34 per cent tariff, on top of an existing 20 per cent levy.

China vowed retaliation, as did the European Union, which faces a 20 per cent duty. South Korea, Mexico, India and several other trading partners said they would hold off for now as they seek concessions before the targeted tariffs take effect on April 9.

Global financial advisory group deVere said the US tariffs would lift prices higher on thousands of everyday goods, from phones to food, fuelling inflation “at a time when it is already uncomfortably persistent”.

“This is how you sabotage the world’s economic engine while claiming to supercharge it,” deVere chief executive Nigel Green said.

“It’s a seismic day for global trade. Trump is blowing up the post-war system that made the US and the world more prosperous, and he’s doing it with reckless confidence.”

No end yet to the roller coaster ride

VanEck Asia Pacific boss Arian Neiron said uncertainty would most likely prevail in the near term, warning Australia was not immune.

“It was only a few months ago that American exceptionalism was the topic du jour and the appetite for US assets with a negative equity risk premium was near-insatiable,” Mr Neiron said.

“Now, with Trump’s new Liberation Day tariffs representing a seismic shift to global trade, we have observed a marked change from idealism to hyper-realism.

“One thing investors can be sure of is the fundamental principle for navigating uncertainty, which is diversification.

“In this environment, we think there are distinct opportunities for diversification into the under-owned, unloved corners of the capital markets.”