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The Australian stock market has wiped out the entire gains of the past year with $106 billion lost so far today in the wake of a massive slump on Wall Street last Friday, when China upped the ante in US Donald Trump's trade war by announcing retaliatory tariffs against its second-largest trading partner.
The Australian dollar has also slipped below US60c for the first time since the COVID-19 pandemic in March 2020 as the market digested the impact of US tariffs on the global economy.
The impact was turbocharged on Friday when China hit back after the US imposed a blanket 34 per cent tariff on goods from China with its own 34 per cent tariff on US goods.
Shares from large caps to small caps were caught up in the downturn, which saw the ASX All Ordinaries slump by more than 6 per cent in early trading to 7,347 points - down almost 500 points from Friday’s close. This was its lowest point since early December 2023 and well down from February’s record high of 8,882.
The share market has since rebounded only marginally and at 1pm AEST is still down 3.71 per cent on Friday's close, having lost more than 500 points - or $180 billion - since the US leader's announcement of what he called "Liberation Day", including a 10 per cent tariff on Australian goods.
No sector was spared from the fallout with resource and energy stocks among the hardest hit.
Financials also bore the brunt of investor fears with Commonwealth Bank of Australia (ASX: CBA) sliding as much as 9 per cent to a low of $140.21, while buy-now-pay-later group Zip Co (ASX: ZIP) suffered a 16 per cent fall to a low to a low of $1.08.
Other shares that fell sharply include QBE Insurance Group (-6.95 per cent), Pro Medicus (-7.59 per cent), Aristocrat Leisure (-6.79 per cent), Sonic Healthcare (-7.27 per cent), Lovisa (-9.5 per cent), Magellan Financial Group (-9.05 per cent) and NEXTDC (-6.34 per cent).
In the resources sector, Rio Tinto (ASX: RIO) slumped 8 per cent to a low of $103.58 and BHP Group (ASX: BHP) fell as much as 9.6 per cent.
But in a day trader’s dream run, most shares were trading well above their lows by the end of the morning session.
Among the biggest drops among the large cap stocks was Santos (ASX: STO) as the price of crude oil also took a hit over global recession fears.
The WTI was trading around US$60 per barrel – down from more than US$70 last week ahead of the tariff announcements by Trump.
Santos shares fell as much as 12.6 per cent to a low of $5.20 and they were still down by about 10 per cent by the midday session.
However, the Australian share market broadly regained some lost ground by midday with the ASX 200 trading at 7,383.8 – down 284.0 points and booking a loss of more than $100 billion in value since Friday’s close.
In its daily alert to investors, the CBA says Wall Street’s “fear gauge”, the CBOE Volatility Index, on Friday highlighted “growing panic among investors” as it closed at its highest level since April 2020.
The Dow Jones index on Friday fell 2,231 points or 5.5 per cent in its biggest decline since June 2020.
“US Fed Chair Powell spoke and noted the inflation risks posed from US tariffs and the focus would be anchoring long-term inflation expectations to make certain a one-off shift higher in the level of prices would not become an ongoing inflation problem,” says the CBA.
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