Horror day for Australian shares as market smashed 2.4 per cent lower on Trump’s tariffs

Australian shares have plunged to their biggest weekly loss in three years as the brutal global sell-off triggered by Donald Trump’s tariffs shreds investor confidence and batters superannuation savings. With Wall Street recording its worst performance in nearly five years overnight on Thursday, the S&P-ASX200 inevitably followed suit, losing up to 2.5 per cent on Friday before closing once more in correction territory at 7667.8 points, down 2.44 per cent. The fall - its biggest in eight months - wiped another $57 billion from already battered share values and took the market’s losses for the week to 3.9 per cent. It is down 6.02 per cent for the year, having hit a record high of 8555.8 in mid-February. All but one of the S&P-ASX200’s sectors finished in the red, with more than 60 stocks losing five per cent or more. They included US-focused buy now, pay later group Zip Co (down 13.8 per cent), Corporate Travel Management (11.7 per cent), appliance maker (12 per cent), Santos (9.4 per cent) and Woodside Energy (9.1 per cent). The Australian dollar has also been smashed, losing 1.6 per cent in its biggest decline in six weeks to US62.3¢. Regional markets were also smashed, with Japan following its near three per cent loss on Thursday by shedding another two per cent, Hong Kong dropping a further 1.5 per cent and China’s CSI 300 falling 0.5 per cent. The US President’s minimum 10 per cent “reciprocal” tariffs against the country’s trading partners, the spearhead of Mr Trump’s plan to remake the world economic order by rejuvenating US manufacturing, has sent shockwaves around the world and sparked fears of a US recession. The deepening concerns were reflected in the US sell-off overnight Thursday, with $US3.5 trillion ($5.6tr) slashed from stocks as the S&P500 collapsed 4.8 per cent, its biggest fall since the onset of COVID-19 in June 2020. The damage was worse for companies reliant on supply chains that are depend on overseas manufacturing, notably the likes of Apple, Dell Samsung and Nike. This week’s savage sell-off has investors pondering when to buy back in, but legendary US investor Bill Gross warned investors to stay on the sidelines. “Investors should not to try to ‘catch a falling knife’,” he said, while adding that he did see opportunities in US stocks that offered safe dividends. While many observers expect the tariffs to be amended after targeted countries offer concessions to the US, Mr Gross said “Trump can’t back down soon ... he’s too macho for that”. AMP Capital chief economist Shane Oliver reiterated his view that global and Australian stocks will likely fall another five per cent before Mr Trump potentially is forced to wind back the tariffs. “A 10 per cent fall in US shares was not enough to put pressure on Trump but a 15 per cent plus fall likely will at some point resulting in some moderation in the tariffs and refocus on the market positive aspects of his agenda, like tax cuts and de-regulation,” Dr Oliver said. “In this regard the pressures on Trump are growing with collapsing consumer and business confidence, four Republican Senators voting with Democrats to reject the tariffs on Canada, Europe moving to purchase its own rather than US weapons in rearming, Elon Musk looking like he is on the way out and Congress now having the revenue from the tariffs to move faster on its tax cuts. “Lower share prices and a US pivot away from tariffs to more positive supply side policies will eventually create buying opportunities for investors, but there may be a way to go yet.” Mr Trump insists the tariffs will cause short term pain, but generate long term gain for the US by luring more manufacturing and revenue. But economists and investors differ, fearing the levies will drive up inflation, retard economic growth, accelerate cuts to official interest rates and potentially push the US into recession by the end of the year. Royal Bank of Canada on Thursday expressed doubt that US households could quickly pivot away from the imported goods and services that account for about 10 per cent of US consumption. “Considering the extent of sweeping tariffs, it will be relatively difficult for consumers to substitute away from imported goods in the near term,” it said. “For example, US technology in many cases requires chips from Asia and most textile factories are found beyond US. borders. “Outside of the auto sector, ‘reciprocal’ tariffs will show up in household furnishings (including Scandinavian furniture), recreation commodities (including children’s toys largely from Asia), and medical supplies from Europe among others.” Global investment firm T Rowe Price is among those urging patience, while admitting the tariffs are bigger than it had expected. “From here, we must closely watch retaliation and look for signs of negotiation,” Scott Berg, portfolio manager of the global growth equity strategy at the US-based group, said. “If nothing were to change, in their current form, tariffs on $US3.3 trillion of imports have large implications for inflation, rates, consumption, trade and growth,” Mr Berg said. “What is striking to us is the contradiction between these tariffs and Trump’s pro-growth mandate. “The economy, businesses and middle-class Trump supporters will be negatively impacted. “Tariffs at these levels are in direct conflict to other stated pro-growth policies.” Downgrading its forecast for US stocks this year, global investment bank UBS said “the extend of the announced tariffs has surprised both us and the market more broadly”. UBS is now tipping the S&P500 to finish 2025 at 5800, down from its previous forecast of 6400, citing uncertainty about the tariffs, lower earnings growth and an expected prolonged period of market volatility. The new forecast is still 7.5 per cent above Thursday’s close by the index but below its record high of 6144.15 in February. Gold was steady, but oil was off sharply.

Horror day for Australian shares as market smashed 2.4 per cent lower on Trump’s tariffs

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