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The Australian stock market has dropped by 2 percent during the initial trading session.
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The Australian stock market has shed $50 billion in value as
Donald Trump
‘ extensive tariffs raise concerns about a potential U.S. economic downturn and increased expenses for consumers.
The benchmark S&P/ASX200 plunged 1.99 per cent in the opening half-hour of trade on Thursday morning.
By noon
Sydney
By this time, the decline rate had slowed to 1.59 percent, with the index trading at 7,808.20 points.
At the worst point in early trade, $50billion had been wiped off Australian shares.
The decline in the Australian stock market mirrored the events on Wall Street where the main index, the S&P 500, fell by two percent, while the technology-heavy Nasdaq decreased by three percent.
Australia’s leading integrated beef producer, the Australian Agricultural Company, performed below the general local market as its stock price dropped by 3.18 percent to $1.37 during morning trading.
The shares of livestock agency Elders dropped by 3.1 percent to reach $6.55.
Last year, beef was Australia’s largest export to the United States, and Trump criticized Australia’s biosafety regulations, claiming they offend American livestock producers.
‘Australia has banned them—and they’re wonderful people, and wonderful at everything—but they prohibit American beef,’ he stated.
‘Nevertheless, we imported AU$3 billion worth of Australian beef from them solely last year. They refuse to accept any of our beef.’
Jessica Amir, a market strategist at Moomoo, stated that Trump’s ‘Liberation Day’ tariffs have alarmed investors across various industries, including technology and agriculture.
“It’s not just detrimental to Australian equities, but also harmful for US investors, as stock prices are dropping sharply,” she commented.
‘Both tariffs and their consequences will adversely affect international businesses, agricultural producers in Australia, as well as investors across the board.’
The AMP chief economist and head of investment strategy, Shane Oliver, stated that concerns over a potential U.S. recession are unsettling financial markets, particularly with the recent tariffs imposed by the Trump administration being more stringent than the 1930 Smoot-Hawley tariffs during the Great Depression era.
We estimate that the announcement scheduled for April second would push the United States’ average tariff rate higher than what was observed during the 1930s following the implementation of the Smoot-Hawley tariffs. This could increase the likelihood of a U.S. economic downturn due to diminished confidence and disrupted supply chains, as well as have a more significant impact on worldwide economic expansion,” he stated.
The likelihood of a US recession has likely increased to approximately 40 percent.
The Australian Industry Group CEO, Innes Willox, stated that a trade conflict led by America could lead to higher consumer prices due to increased protectionist measures driving up expenses throughout the supply chain.
This will inevitably lead to reprisals, placing restrictions on established trade ties and increasing expenses for both companies and customers, he stated.
Australia has experienced a widespread 10 percent tariff, aligning with countries such as New Zealand, the UK, the United Arab Emirates, Saudi Arabia, and Egypt.
Beef producers from South America, including Brazil, Argentina, and Chile, have also faced 10 percent tariffs.
However, China, which is Australia’s largest trading partner, faces a 34 percent tariff, whereas Japan encounters a 24 percent import duty, compared to South Korea, which has a 25 percent tariff.
A deceleration in China might impact the demand for Australia’s primary export, iron ore—the material essential for steel production.
Gold, which was Australia’s second-largest export to the U.S. last year, reached an all-time peak price of $US3,173 per troy ounce on Thursday afternoon.
The commodity is considered a refuge asset when financial markets experience turbulence.
The concern over Trump’s tariffs caused
Americans clamour for Australian gold in January
This led to Australia experiencing an unusual monthly trade surplus with the United States.
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