ASX 200: Australian dollar dives and share market sheds $160bn in 'bloodbath' opening amid US trade war gloom

More than $160bn was wiped off Australian shares early on Monday, before the market recorded a modest reprieve, amid fears of a full-blown trade war and global recession. The benchmark S&P/ASX 200 sank more than 6% to trade below the 7,200 point mark within minutes of the market opening on Monday, sending it back to levels not seen since late 2023. The huge price falls diminished the value of almost all investment and superannuation portfolios with shares, building on the market falls recorded last week immediately after Donald Trump announced the details of his “liberation day” tariff plan. “It’s a bloodbath on the share market today in Australia,” said Luke McMillan, the head of research at Sydney-based Ophir Asset Management. Sign up for the Afternoon Update: Election 2025 email newsletter He said the market action resembled falls recorded during the Covid pandemic and global financial crisis. “The key difference from those other periods is that this one is started by one person, essentially – being the US president,” McMillan said. “We just haven’t really had one person cause a bear market, let alone the president.” There were few places to hide on the ASX on Monday, with everything from banking to mining and energy stocks down sharply. Shares in Australia’s two biggest listed companies, Commonwealth Bank and BHP, were both down more than 5% in early afternoon trading. The ASX trimmed some of its early losses to be down about 4% by midday, reducing the day’s stock market losses to about $100bn. It closely followed the lead from Wall Street, where the futures market also bounced after heavy falls recorded earlier in the day. While Trump’s new tariff regime sparked an initial sell-off across global share markets last week, plans to hit the US with retaliatory imposts from major economies, including China and the EU, have heightened risks of a global recession. Traders view Australia’s economy as being closely tied to China through their significant trading relationship. Investors were looking for signs of a truce in the global trade war before reading too much into the intraday recovery in stock prices on Monday. “You need a catalyst for markets to recover,” said McMillan. “They don’t just kind of stop of their own accord.” Tony Sycamore, market analyst at IG Australia, said China’s 34% retaliatory tariffs on all US imports, due to come into effect this week, had sparked fears of a “full-blown trade war, imminent recession and a liquidity crunch last seen during the early pandemic”. He said while “the door for negotiation” remained open for countries to strike deals with Trump, there was a risk that relief didn’t arrive quickly enough to prevent the global economy from falling into recession. Currency woes The Australian dollar fell to its lowest level against the US dollar since Covid, as global markets sold off. The local currency has close links to commodity prices, particularly iron ore, which would suffer if global economic activity slowed, especially in China. One Australian dollar was buying just over 60 US cents early afternoon on Monday after falling to a low of 59.64, its lowest point since April 2020. It was worth 64 US cents mid-last week, hours before Trump set markets reeling with his tariff announcement. The Australian dollar also reached pandemic-era lows in Europe, with one dollar buying just 54.4 Euro cents or 46.2 British pence at its lowest point on Monday morning. Markets were selling off the Australian dollar in Asia, too. It was worth less than 15,500 Vietnamese dong on Monday when it had been buying almost 16,500 dong on Wednesday. The dollar slumped in India, Indonesia and New Zealand. “When there is concern about a global slowdown, and particularly from the tariff and global trade war, then there is less demand for our commodity,” AMP economist My Bui said, referring to iron ore.