Australia’s share market is heading lower on Monday after the United States reverted to a tough tariff stance on China, following Beijing’s move to place export controls on rare earths minerals.
The benchmark S&P/ASX200 fell 50.3 points, or 0.56 per cent, to 8,908, as the broader All Ordinaries tumbled 54.4 points, or 0.59 per cent, to 9,209.9.
The local downturn tracked with a heavy sell off on Wall Street on Friday, as the resumption of trade tensions prompted the steepest daily dips in the S&P500 and Nasdaq since early April, when US President Donald Trump first announced sweeping tariffs on trading partners.
Low volatility, frothy valuations and stretched position had had provided the perfect backdrop to a shock in equities markets, Capital.com senior market analyst Kyle Rodda said.
“Nothing else matters in the markets until this fresh stand off between the US and China simmers down again,” he said.
“This fresh tit-for-tat reintroduces a level of uncertainty that could impact consumption, investment and employment decisions, slowing growth for a period – something that has to be discounted in asset prices.”
Almost all local sectors were trading lower by lunchtime, with IT stocks plummeting 2.2 per cent in early trade and tracking with the Nasdaq’s 3.5 per cent tumble on Friday.
Health care stocks were also under pressure, fading 0.7 per cent.
Financials were sold off, slipping 0.6 per cent as three of the big four banks lost up between 0.5 and 1.1 per cent, while ANZ lifted 0.9 per cent to $35.17 after announcing an aggressive cost-cutting strategy.
The raw materials sector was alone in trading higher by midday, with gold miners returning to strength as safe haven inflows helped push spot prices back towards last week’s $US4,060 ($A6,242) an ounce record.
Northern Star, Evolution and Newmont each rallied three per cent or more in early trade.
Lynas and Iluka also caught a bid as China’s export curb reinvigorated talks of a domestic rare earths and critical minerals strategic reserve to hedge against China’s production dominance.
Energy stocks plummeted 1.7 per cent lower by midday after oil prices tanked to five-month lows on Friday, as renewed trade tensions reignited global growth worries.
In company news, shares in Penfolds owner Treasury Wine Estates tumbled almost 13 per cent after it withdrew previous guidance due to market challenges, particularly in China.
Qantas fell 1.7 per cent to $11 after cyber security minister Tony Burke said the flying kangaroo could face fines over a hacking scandal that exposed the personal data of up to 5.7 million customers on the dark web.
Cryptocurrencies were hammered in the wake of Friday’s tariff announcement in a cascading liquidation event that wiped out $US20 billion ($A31 billion) in leveraged positions in 24 hours.
The move erased $US380 billion ($A585 billion) from the sector’s $US4.1 trillion ($A6.3 trillion) market capitalisation.
Prices have stabilised somewhat since, and Bitcoin is trading at $US115,360 ($A117,060) after hitting a fresh high above $US126,000 ($A193,922) last week and tumbling to near $US100,000 ($A153,906) on Saturday morning.
The Australian dollar is buying 65.14 US cents, down from 65.65 US cents and dipping from recent strength as market jitters bolstered the greenback.
