ASX rebounds after Wall Street’s rollercoaster session; banks, miners rise
By Staff writers
The Australian sharemarket opened higher after its bloodbath on Monday, following a manic session on Wall Street overnight where US stocks careened as President Donald Trump threatened to crank his tariffs even higher, despite global markets’ stunning losses since “Liberation Day”.
The S&P/ASX 200 rose 83 points, or 1.1 per cent, to 7426.30 as of 10.28am AEST, with nine of the 11 industry sectors advancing, led by banks, healthcare and mining stocks. The rebound comes after the index tumbled by 4.2 per cent on Monday, its biggest fall since the COVID-19 pandemic of 2020 as a panicked sell-down wiped almost $100 billion from the local market.
The Australian dollar plunged to five-year lows of less than US60¢ on Monday and was trading at 60.13 US cents as of 10.29am.
US President Donald Trump has doubled down on his stiff tariffs, despite seeing how much Wall Street wants him to do the opposite.Credit: AP
On Wall Street overnight, the S&P 500 slipped 0.2 per cent at the end of a day full of heart-racing reversals as battered financial markets try to figure out what Trump’s ultimate goal is for his trade war. If it’s to get other countries to agree to trade deals, he could lower his tariffs and avoid a possible recession. But if it’s to remake the economy and stick with tariffs for the long haul, stock prices may need to fall further.
Trump threatened drastically higher tariffs on Chinese goods overnight, while giving his strongest signal to date that he will lower tariffs on countries that agree to remove their own trade barriers.
The Dow Jones fell 0.9 per cent, and the Nasdaq composite edged up by 0.1 per cent.
All three indexes started the day sharply lower, and the Dow plunged as many as 1700 points following even worse losses elsewhere in the world. But it suddenly surged to a gain of nearly 900 points in the late morning. The S&P 500, meanwhile, went from a loss of 4.7 per cent to a leap of 3.4 per cent, which would have been its biggest jump in years.
The sudden rise followed a false rumour that Trump was considering a 90-day pause on his tariffs, one that a White House account on X quickly labelled as “fake news.” That a rumour could move trillions of dollars’ worth of investments shows how much investors are hoping to see signs that Trump may let up on tariffs.
Stocks quickly turned back down, and shortly afterward, Trump dug in further and said he may raise tariffs more against China after the world’s second-largest economy retaliated last week with its own set of tariffs on US products.
It’s a slap in the face to Wall Street, not just because of the sharp losses it’s taken, but because it suggests Trump may not be moved by its pain.
Trump has given several reasons for his stiff tariffs, including to bring manufacturing jobs back to the United States, which is a process that could take years. Trump on Sunday said he wanted to bring down the numbers for how much more the United States imports from other countries versus how much it sends to them.
Indexes nevertheless did keep swinging between losses and gains on Monday’s Wall Street session after Trump’s latest tariff threat, in part because hope still remains in markets that negotiations may still come.
“We’re not calling the all-clear at all, but when you have this type of volatility in the market, of course you’re going to have back and forth” in markets not just day to day but also hour to hour, said Nate Thooft, a senior portfolio manager at Manulife Investment Management.
“Literally a Truth Social tweet or an announcement of some sort about real negotiations could dramatically move this market. This is the world we live in right now.”
All that seemed certain overnight was the financial pain hammering investments around the world for a third day after Trump announced tariffs in his “Liberation Day.”
Stocks in Hong Kong plunged 13.2 per cent for their worst day since 1997. A barrel of benchmark US crude oil dipped below $US60 during the morning for the first time since 2021, hurt by worries that a global economy weakened by trade barriers will burn less fuel. Bitcoin sank below $US79,000, down from its record above $US100,000 set in January, after holding steadier than other markets last week.
Trump’s tariffs are an attack on the globalisation that’s remade the world’s economy, which helped bring down prices for products on the shelves of US stores but also caused production jobs to leave for other countries.
It also adds pressure on the Federal Reserve. Investors have become nearly conditioned to expect the central bank to swoop in as a hero by slashing interest rates to protect the economy during every downturn. But the Fed may have less freedom to act this time around because inflation remains higher than the Fed would like. And while lower interest rates can goose the economy, they can also lift inflation.
In the bond market, Treasury yields rallied to recover some of their sharp drops from earlier weeks. Some of the big move may have been because of reduced expectations for cuts to interest rates by the Fed. The yield on the 10-year Treasury jumped to 4.20 per cent from 4.01 per cent late Friday.
Earlier in the day, the S&P 500 briefly fell more than 20 per cent below its record set less than two months ago. If it finishes a day below that bar, it would be a big enough drop that Wall Street has a name for it. A “bear market” signifies a downturn that’s moved beyond a run-of-the-mill 10 per cent drop, which happens every year or so, and has graduated into something more vicious.
with AP
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