Concerns over a possible United States economic pullback which undermined stocks on Wall Street overnight are likely to manifest in a weaker opening on the Australian Securities Exchange on Tuesday.
At 9:20 am AEDT (10:20 pm GMT Monday) the S&P/ASX 200 March share price index contract was trading 70 points (0.9%) lower than the previous settlement at 7,895 points.
In New York share prices fell sharply due to fears of a recession in the world’s largest economy with the Dow Jones Industrial Average losing 2.1%, the S&P 500 dropping 2.7% and the Nasdaq Composite sliding 4% in its worst performance since September 2022.
This provided a real world example of what Australian fund managers had predicted only the day before in an investment webinar – that the market would be volatile for the next six to 12 months due to uncertainty about U.S. economic policy.
In an interview on Sunday President Donald Trump did not rule out that imposing tariffs on trading partners including Canada, China and Mexico could cause an economic downturn.
The Republication head of state avoided using the word ‘recession’ but described the economic environment as a “period of transition” and stressed his focus on “building a strong country”.
The lower opening may wipe out the gains achieved in Australia on Monday when the S&P/ASX 200 index rose 0.2% to finish at 7,962.3 with energy and materials leading . seven of the 11 sectors higher.
Burrell Stockbroking wealth adviser Adam Dight said investors were sitting on their hands as the delay in implementing U.S. tariffs meant “everyone put their guns back in their holsters”.
“Equity markets don’t like insecurity and now the R word (recession) pops up again,” Dight said.
“Unless you need cash to fund a pension, it’s do nothing.”
Stocks going ex-dividend today include Qantas, Helloworld Travel and Coronado Global Resources.
On the bond markets, the yield on Australia’s 10-year government bond was 0.3% down at 4.388%, while the two-year yield was 0.48% lower at 3.751%.
