US markets found some tailwinds overnight on news of a possible trade agreement between the US and its key trading partners, but that quickly reversed as the China-US trade fight continued.
Following Wall Street’s late session dip, the S&P/ASX 200 sank 136.3 points, or 1.81%, to 7,373.7 points by 10.30am (AEST) on Wednesday (9 April).
ANZ Economist Madeline Dunk says the expectations of a possible trade agreement between the US and key trading partners supported near-term market sentiment over much of the overnight session.
US Treasury Secretary Scott Bessent is expecting a couple of big deals “very quickly”, according to Dunk.
However, she says gains were pared after the White House confirmed US President Donald Trump’s threat to respond to China’s retaliation with an additional 50% tariff on China, taking the total tariff rate on many Chinese goods to 104%.
The index has slumped 7.07% over the past five days and is down 5.76% over the past year.
All 11 sectors started the day in the red, led by materials with a 1.83% decline. Utilities slipped 0.57%, energy was down 0.27% and industrials backed off 0.2%.
Again there were very few gainers to start the trading session, with the miners dominating the losers.
Mineral Resources (ASX:MIN) fell another 10.38% to $14.68, Nickel Industries (ASX:NIC) retreated 9.09% to $0.45, aluminium major Alcoa (ASX:AAI) slipped 8.99% to $37.64, Capstone Copper (ASX:CSC) dropped 8.35% to $6.15 and lithium miner Pilbara Minerals (ASX:PLS) wiped off 8% to sit at $1.27 in early trade.
Saxo Global Head of Investment Strategy Jacob Falkencrone says the recent tariff increases are not just about pricier imported products — they create deep economic uncertainty.
“Businesses hesitate to invest, consumers become cautious, and the economy slows,” he says.
“Analysis indicates Trump’s latest tariff hikes could cost each American household roughly US$1,350 ($2,279) extra per year and substantially slow investment and job creation. Such dramatic shifts rarely pass without significant economic fallout.”
However, Falkencrone notes that the actual recession periods themselves are not usually the most damaging times for investors.
“On average, stocks have actually gained around 1% during recessions. Most of the damage is done just before recessions officially begin, as markets anticipate the downturn,” he explains.
The most recent events provided renewed demand for gold, with the safehaven metal pushing back above US$3,000 an ounce overnight. But the momentum was short lived, with gold trading at around US$2,980 an ounce at the time of writing.
Meanwhile, China has been buying up copper at lower prices, with the metal having dropped 10% since Trump announced his reciprocal tariffs. This buying activity has helped stabilise the price of the red metal, which edged back above US$9,000 a tonne.
“The interest is likely triggered by dwindling inventories as the impending US tariffs on copper imports sparked a rush to move metal into the US,” Dunk says.
“This has left inventories relatively low elsewhere around the world. Chinese buyers are also preparing for additional support from Beijing in the form of both fiscal and monetary measures to help spur domestic demand.”
The S&P/ASX200 is Australia’s leading share market index and contains the top 200 ASX-listed companies in terms of market capitalisation, and accounts for about 80% of the country’s equity market. The index is designed to measure the performance of the 200 largest index-eligible stocks listed on the ASX by float-adjusted market capitalisation.
It is recognised as the institutional investable benchmark in the country.
Write to Angela East at Mining.com.au
Images: ASX & iStock
