Australian investors woke up to a financial nightmare on Monday, as the ASX shed over $160 billion in value in a matter of minutes, triggered by growing fears of a global trade war and economic recession.
The S&P/ASX 200 plunged more than 6% shortly after the market opened, diving below the 7,200-point mark—a level not seen since late 2023. The sharp downturn left few corners of the market untouched, hitting everything from banking to mining and energy stocks.
“This is a bloodbath on the share market today,” said Luke McMillan, head of research at Ophir Asset Management. “We’ve seen drops like this during the COVID crash and the GFC. But what’s striking this time is that it’s being driven by a single person—the US President.”
Super Funds and Portfolios Take a Hit
The massive sell-off wiped out value across almost all investment and superannuation portfolios holding shares, adding to losses from last week after Donald Trump unveiled his ‘liberation day’ tariffs.
Blue-chip giants weren’t spared. Commonwealth Bank and BHP shares both fell more than 5% in early trade, dragging down retirement savings for millions of Aussies.
By midday, the market had recovered slightly, trimming its losses to around 4%—but that still left roughly $100 billion wiped off the day’s value.
Global Tensions Driving Local Panic
What began as a response to Trump’s aggressive new trade tariffs has now escalated into a full-blown global concern. China and the European Union have announced plans for retaliatory tariffs, raising the risk of a worldwide recession.
Australia, with its heavy economic ties to China—especially through iron ore exports—is particularly vulnerable. Investors are watching closely for any signs of diplomacy, but for now, uncertainty reigns.
“You need a catalyst for markets to recover,” McMillan warned. “They don’t just stop falling without a reason.”
China’s Retaliation Sparks Deeper Fears
Market analyst Tony Sycamore from IG Australia highlighted China’s response as a major red flag. With 34% retaliatory tariffs on US imports set to kick in this week, Sycamore said fears of a trade war, global recession, and liquidity crisis—not seen since the early days of COVID—are now top of mind.
Although the door for negotiation remains open, Sycamore said time is running out: “The longer it takes, the greater the risk the global economy tips into recession.”
Aussie Dollar Slumps to Pandemic-Era Lows
The Australian dollar took a beating alongside the share market, plunging to 59.64 US cents on Monday—its lowest level since April 2020.
The currency’s fall reflects global worries about declining commodity demand, particularly for iron ore, which plays a huge role in our economy. “When global trade slows down, demand for our exports drops—and so does the dollar,” said AMP economist My Bui.
By early afternoon, one Aussie dollar was only buying just over 60 US cents, down from 64 cents last week before Trump’s announcement.
It also hit lows against other major currencies:
- 54.4 Euro cents
- 46.2 British pence
- Under 15,500 Vietnamese dong, down from nearly 16,500 midweek
Markets in India, Indonesia, and New Zealand were also selling off the Australian dollar.
What’s Next for Aussies?
For everyday Australians, this sharp market dip might not cause immediate panic—but it does impact super balances, the cost of living, and economic confidence.
And with no clear resolution to the trade tensions in sight, the uncertainty could linger.
Now, more than ever, Aussies will be watching both Washington and Beijing closely—because what happens overseas is clearly hitting home hard.
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Mitchell
Mitchell is a seasoned Ph.D. scholar with extensive expertise gained through years of rigorous research, publication, and teaching experience. He brings a wealth of knowledge and analytical skills to tackle complex academic challenges. His work is dedicated to delivering innovative solutions, advancing knowledge, and promoting academic excellence. Proficient in research methodology, data analysis, and scholarly writing, Mitchell has contributed to peer-reviewed journals and mentored students to achieve academic success.
