Australian shares tanked early trading, wiping roughly $155 billion of the top 500 stocks after China announced it would respond in-kind to US tariffs, escalating fears of a global trade war and recession.
The S&P/ASX200 plummeted 460.3 points in early trading, or 5.99 per cent, to 7,2106, as the broader All Ordinaries fell 464.7 points, or 5.92 per cent, to 7,388.8.
The sell-off in the All Ordinaries 500 most valuable stocks on the bourse equated to more than $155 billion of the $2.6 trillion market value.
All 11 local sectors were deep in the red barely an hour into the session with financial stocks, which account for almost a third of the bourse’s value, shedding 7.2 per cent.
The fall follows a Wall Street furore on Friday, after China vowed to place a 34 per cent retaliatory tariff on the US in response to president Donald Trump’s ‘Liberation Day’ tariffs.
Materials stocks, which comprise almost a fifth of the local stock market’s value, were down eight per cent.
Energy stocks also tanked, down 9.6 per cent as crude demand worries pushed oil prices off a cliff.
Brent crude futures were trading at $US63.17 a barrel, the oil price down more than 18 per cent since Trump launched the tariffs last week, crushing crude demand expectations.
The White House has previously vowed to meet any retaliatory tariffs with even higher imposts, stoking fears of a race-to-the-bottom trade war that could in turn trigger a global recession.
“The sell-off in US stock markets has intensified this morning after China retaliated on Friday night,” IG Markets analyst Tony Sycamore said.
This had sparked “fears of a full-blown trade war, imminent recession, and a liquidity crunch last seen during the COVID crash of 2020”, he warned.
The slide in equities markets is expected to continue after US stock futures fell ahead of Wall Street resuming trading later on Monday.
Investors were short-selling markets in the UK, the European Union and Australia, Westpac economist Ryan Wells said.
“Stock market volatility spiked at a new post-pandemic high as the historic sell-off in global equities persists, Mr Wells wrote in a research note.
Crude oil and copper prices are down while gold has unwound most of the rally seen in late March.
The Australian dollar fell below 60 US cents to 59.98 US cents to be down more than six per cent since the tariffs were announced on Thursday.
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