Australian shares have plummeted more than two per cent in early trading, with deeper drops expected in Asian markets after US tariffs blew expectations out of the water.
The S&P/ASX200 was down 143.3 points, or 1.83 per cent, just after 11am AEDT on Thursday to 7,791.2, as the broader All Ordinaries gave up 146, or 1.80 per cent, to 7,987.1.
Markets had expected US president Donald Trump’s “Liberation Day” tariffs to have a ceiling of 15 per cent, but instead Mr Trump announced a base rate of 10 per cent, and imposts including 34 per cent for China, 24 per cent for Japan and 20 per cent for the European Union.
Australian exports to the US will be taxed at 10 per cent, but heavier tariffs in the Asian region will have flow-on effects for the national economy.
“The tariff rates unveiled this morning far exceed baseline expectations, and if they aren’t negotiated down promptly, expectations for a recession in the US will rise dramatically,” IG Markets analyst Tony Sycamore said.
“My guess is we will very shortly see Goldman Sachs revise higher their 12-month estimate of a recession in the US from 35 per cent to 50 per cent.”
Ten of 11 local sectors were trading lower, with only consumer staples eking a 0.1 per cent gain.
Energy stocks were leading losses and down 2.5 per cent and oil prices tanked more than 3.5 per cent after the tariff announcement crushed crude demand expectations.
Financials were also taking a battering, down 2.2 per cent, with CBA down 1.5 per cent, and the remaining three big banks all down more than 2.4 per cent.
Investment and financial services giant Macquarie had plummeted 4.2 per cent to $188.70 by 11am AEDT.
Materials were down 1.4 per cent, but iron ore giants were suffering under what the tariffs could mean for China’s growth and resultant demand for the steel ingredient, with BHP, Rio Tinto and Fortescue all down more than 2.3 per cent.
IT stocks bled 2.6 per cent lower, tracking with a more than four per cent bloodbath on Wall Street’s tech-heavy Nasdaq index.
The Australian dollar is trading lower against the greenback, buying 62.62 US cents, down from 62.94 on Wednesday at 5pm, but recovering from a dip to 62.63 earlier on Thursday morning.
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