The Australian sharemarket sank on the opening bell, wiping $50bn to $60bn off the market, after US President Donald Trump announced wide-ranging tariffs on exports to the US.
Australia fared better than most countries, but still copped a 10 per cent “reciprocal” tariff, described by Prime Minister Anthony Albanese as “unwarranted”.
But despite stocks tanking, the market is now fully expecting the Reserve Bank to cut the official cash rate at its May board meeting.
While initially the US markets rallied at the close before ahead of President Trump’s announcement at 4pm Wednesday Washington DC time – 7am AEDT.
But after the announcement, futures markets sank by as much as 4.5 per cent.
The S&P/ASX200 was lower on Thursday, dropping 111.70 points or 1.41 per cent to 7,822.80.
Capital.com senior financial market analyst Kyle Rodda said the tariffs could have been worse, but they could have also been better.
“The biggest issue seems to be the absolute level of tariffs outlined in the plan,” he said. “While each trading partner will experience a targeted tariff matching or lower than that which is applied on the US economy, in the aggregate, the level of tariffs will be roughly 20 per cent – on the high side of what was estimated.
“As a result, the markets have to price in a slightly greater growth shock than what was already priced-in, not just on the US economy, but also the rest of the world.
“That alone explains the drop in US futures – the tariffs were announced after the close – the rally in the US dollar, the boost in gold, and the sell-off in oil prices.”
– NCA NewsWire