The Australian stock market opened sharply lower, following Wall Street's dismal performance. This comes after US President Trump confirmed the implementation of tariff policies on several major economies. As a result, investor sentiment was severely impacted, leading to widespread selling of stocks to mitigate losses.
Read Also...:
As warming climate hammers coffee crops, this rare bean may someday be your brew
03-04, 2025
Owner of NYC day care where toddler fatally ingested fentanyl gets 45 years in prison
03-04, 2025
Trump's long-threatened tariffs against Canada and Mexico are now in effect, kicking off trade war
03-04, 2025
Hundreds of Tesla vehicles recalled due to a software issue which may affect the steering wheel
03-04, 2025As of press time, the Australian ASX 200 index was down 1.10%, or 91 points, and the downward trend continues. All 11 sectors opened in the red, and if this momentum persists, the local stock market will erase all gains made this year. The market is concerned about future economic prospects, and investor confidence is notably weak.
Overnight, US stocks fell sharply as investors worried that President Trump's proposed tariffs on Canada, Mexico, and China would take effect on Tuesday (Wednesday AEST). The Dow Jones Industrial Average fell 650 points on Monday, a drop of 1.48%, closing at 43,191 points. It had fallen nearly 900 points during the session before slightly recovering. The S&P 500 index fell 1.76%, and the Nasdaq Composite index fell 2.64%. The Nasdaq index has fallen approximately 6.5% since Trump took office on January 20.
At a press conference at the White House, Trump stated, "Tomorrow, a 25% tariff will be imposed on Canada and Mexico, and this will begin to take effect. What they need to do, frankly, is build their car factories and other industries in the United States, so they don't have to pay tariffs." Trump also said that the two trading partners have "no room to negotiate" to avoid these tariffs and stated he is using tariffs to "punish" countries he believes are benefiting from the US economy without giving enough back.
Wall Street's fear gauge, the VIX, surged to its highest point this year after Trump made the above remarks. Gustavo Flores-Macias, a professor of government and public policy at Cornell University, said, "Due to the uncertainty of tariffs, the stock market has erased the gains brought by the 'Trump rally' after the presidential election, and the expected upward pressure on prices is making investors hesitate."
Commerce Secretary Howard Lutnick stated at a press conference that global companies can avoid tariffs by investing in production in the United States, such as TSMC, the Taiwanese chip manufacturer that announced a $100 billion US investment plan at the White House on Monday. Goldman Sachs analysts believe that Trump's tariffs will raise the prices of imported goods, which may increase demand for goods produced in the United States. However, they also pointed out that tariffs will negatively impact some US businesses.
"The increase in tariffs will also increase the production costs of some domestic producers and may trigger foreign retaliation against US exports, both of which could harm domestic production," they wrote in the report. Jason Draho, head of asset allocation for the Americas at UBS Global Wealth Management, said in a report on Monday that US stocks "are likely to be volatile" until US President Trump's policies point to a greater focus on growth. Draho said he does expect growth in the future and maintains a "positive medium-term outlook."
Stocks that dragged the market down on Monday included Nvidia (NVDA), which fell 8.7%. The 10-year US Treasury yield slipped to 4.16%, indicating concerns about uncertainty and future economic growth. Bitcoin was trading at approximately $85,600 on Monday afternoon, down 8.6% over the past day, essentially erasing the gains made after Trump announced the establishment of a strategic cryptocurrency reserve, including Bitcoin, on Sunday.
Meanwhile, shares of European defense companies surged to record highs on Monday as European leaders considered the need to rearm amid reduced US support in the Ukraine conflict.
