The Australian equities market experienced a significant downturn, with approximately $100 billion in market capitalization evaporating, triggered by investor apprehension stemming from recently imposed tariffs by the United States. The benchmark ASX200 index concluded trading at 7343.3, marking a 4.2 percent decline. The decline constituted the most substantial single-day loss for the Australian stock exchange since the onset of the COVID-19 pandemic in May 2020.
Initial trading sessions witnessed even more precipitous declines, with market capitalization plummeting by $160 billion, representing a 6.4 percent drop to a 16-month low of 7177.3. While the market recovered somewhat from these early losses, the day’s overall performance remained profoundly negative. Key sectors, including mining, energy, and the major banking institutions, were particularly affected. This downturn occurred despite the ASX-200 commencing trading at a 100-day low of 7453.90. Simultaneously, the broader All Ordinaries index also suffered a considerable setback, falling by 4.12 percent to close at 7524.3.
The wave of selling pressure, attributed to concerns surrounding the implications of U.S. trade policies, extended its reach across Asian markets and initiated a downward trend in European trading.
Shortly after opening, London’s FTSE 100 index registered a decline exceeding 5 percent, while Germany‘s Xetra DAX experienced an early plunge of around 9 percent before partially recovering. In Asia, Tokyo’s Nikkei 225 index faced a near 8 percent drop immediately after the commencement of trading, briefly leading to the suspension of futures trading for the benchmark. The index ultimately closed down by 7.8 percent at 31,136.58. While Chinese markets often exhibit divergence from global trends, they were not immune to the sell-off. Hong Kong‘s Hang Seng index plummeted by 12.4 percent to 20,022.82, and the Shanghai Composite index recorded an 8.4 percent loss, closing at 3059.94. Elsewhere in the region, Taiwan’s Taiex index experienced a significant fall of 9.7 percent, and South Korea‘s Kospi index declined by 5.6 percent.
According to Rintaro Nishimura, an associate at the Asia Group, the primary driver behind this widespread decline in stock prices is the pervasive uncertainty surrounding the future ramifications of these tariffs. Compounding these concerns, indications from U.S. futures markets suggested the likelihood of continued downward pressure in subsequent trading sessions. Futures for the S&P 500, the Dow Jones Industrial Average, and the Nasdaq Composite indices indicated losses of 3.7 percent, 2.9 percent, and 4.7 percent, respectively.
These substantial market losses are unfolding against a backdrop of increasing apprehension regarding a potential recession in the United States. The Australian stock market had already experienced a significant $56.6 billion loss on the preceding Friday, marking the largest single-day decline in eight months, following the U.S. administration’s tariff announcement the previous week. While Australia’s direct exports to the U.S., which now face a broad 10 percent tariff, constitute a relatively small portion of its total exports (approximately four percent), the market has reacted strongly to fears of an escalating trade dispute between the U.S. and China, Australia’s largest trading partner.
China has responded to the U.S.’s imposition of a 34 percent tariff on its imports last week, which was added to an existing 20 percent levy, by implementing its own 34 percent tariff on goods originating from the U.S. Several other nations and entities, including U.S. allies such as India, South Korea, and the European Union, have also declared their intention to undertake retaliatory measures. Australian Prime Minister Anthony Albanese has affirmed a commitment to refrain from imposing tariffs on the U.S. but has also stood firm on certain domestic policies that U.S. lobbyists have identified as trade barriers. These include Australia’s stringent biosecurity regulations, which inherently limit the importation of U.S. beef, and the cost-effective medicines provided under the Pharmaceutical Benefits Scheme.
According to the Associated Press, the White House reported that over 50 countries have initiated contact to commence negotiations regarding the tariffs. Despite the turmoil observed in global and U.S. equity markets, President Trump has conveyed an unperturbed stance, remarking to reporters that “sometimes you have to take medicine to fix something.”