The Australian Securities Exchange (ASX) is facing its largest fall on record in wake of recent chaos in international markets. Futures trading suggests a 0.9% drop as the ASX 200 gets set to start on a weak note on Monday. Looking back, last week was crazy, to say the least, with unprecedented and brutal drops on Wall Street. These declines were mostly driven by increasing trade tensions between the U.S. and China.
Last Friday, US President Donald Trump announced that he plans to slap a 100% tariff on all Chinese imports. He followed it up with a new set of phased-in export controls on critical US-made software. On Friday, March 13th, this announcement rocked financial markets, leading to a subsequent sell-off in every corner of the financial industry. The blow primarily landed on the tech-heavy Nasdaq, which fell 3.6% in reaction. This is evident in the performance of major actors in the AI space—Nvidia, Tesla, Amazon and Advanced Micro Devices—whose stocks plummeted over 2%.
Wall Street’s Decline
The repercussions of Trump’s announcement were clear on all the major US indices. The S&P 500 plunged 2.7% in its largest one-day rout since early April. At the same time, the Dow Jones Industrial Average lost 1.9%, adding to a general environment of fear and doubt in the eyes of investors.
US copper futures crashed more than 5%. This steep drop off is a clear signal of increasing fears over a slowing China, the globe’s biggest user of commodities. Brent crude oil futures fell about 3%, hitting a six-month low at $62.73 per barrel.
“The second largest economy and the first largest economy are arguing again, and we’re seeing a sell first, ask questions later mentality to end the week,” – Ryan Detrick, chief market strategist at Carson Group.
European Markets React
European markets were not immune to the chaos though. The Eurostoxx600 index finished 1.2% lower after hitting new all-time highs earlier in the week. The significant downturn underscores an emerging sense of nervousness rippling through global markets. Investors have had a tough time trying to gauge the effects of increasing trade hostilities.
The response of currency markets was further reflective of these tensions. The Australian dollar dropped to 65.04 US cents, down 0.8%, in an early sign of a turn in investor sentiment. At the same time, the US dollar index fell, adding to fears of economic stability as trade war tensions escalate.
Commodities and Digital Assets
Although there were steep declines in traditional commodities, like agriculture and mining sectors, others proved to be more resilient. Spot gold prices increased to 1.1%, at $4,017 per ounce, as investors moved into safe-haven assets during the volatility. Iron ore prices followed suit, up 1.2% to $106.20 per tonne.
Bitcoin soared 3.5% to $114,300. This increase came as digital currencies captured the public imagination during a turbulent financial market. If this increase represents a trend toward favoring non-traditional investments by certain traders, all the better.
“President Trump’s post did truly come out of nowhere, which opened the door for some extreme volatility,” – Ryan Detrick, chief market strategist at Carson Group.
