ASX Suffers Worst Day Since COVID as Global Trade War Looms

Good Evening,

Welcome to Equity Espresso’s Daily Market Recap. Markets crashed harder than a test dummy in a failed safety demonstration today, as tariff fears and commodity collapses sent investors running for the exits. We get you across everything you might have missed. Let’s jump in.

Local Market

It was a bloodbath on the markets today, with the ASX suffering its largest one-day percentage loss since May 2020. The S&P/ASX index plunged 324.5 points (-4.23%) to close at 7,343.30. Futures markets had signalled trouble ahead after Wall Street's major indices tumbled more than 5% on Friday. Our market dropped nearly 500 points at the opening bell before gradually recovering some ground throughout the day.

Markets are still processing the impact of Trump's tariffs and the risk of a global trade war. In the meantime, investors are selling off equities now in the face of the unknown near-term future. Not helping is the overhang of a global response, with retaliation measures already beginning, with China responding on Friday by imposing its own increased tariffs of 34% on all imported U.S. goods.

As U.S.-China tensions escalate, global commodities tumbled, with Iron ore falling 2.6% to $US98/t, as Singapore futures hit their lowest level since January. Oil markets plunged, with Brent crude dropping nearly 4% to a four-year low of $US63.21 after Saudi Arabia slashed prices by the most in over two years. Even Gold fell below $US3,000 as investors liquidated positions to cover losses elsewhere.

The impact on China has not only seen a commodity price plunge but the Aussie Dollar slipping below US60¢. The Australian dollar fell, continuing the sell-off that included a 4.6% plunge on Friday. Why is The Aussie Dollar Falling? The dollar is dropping because Australia's economy depends heavily on trade with China. Additionally, prices for Australia's main exports are decreasing on the risk a global trade war will reduce demand for these raw materials.

We identify a couple of companies with a large proportion of U.S. sales that could benefit from a falling Aussie dollar in our Stocks To Watch section of our newsletter.

ASX Indices

ASX Sector Performance

Sponsor

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