Australian shares are set to plunge on Tuesday in the aftermath of a strong sell-off on Wall Street.
At 9:20 am AEDT (10:20 pm GMT Monday) the S&P/ASX 200 March share price index (SPI) contract was trading 71 points (0.9%) lower than the previous settlement at 8,226.
In New York stocks fell sharply after United States President Trump confirmed 25% tariffs on Mexico and Canada would go ahead on Tuesday (Wednesday AEDT).
The Dow Jones Industrial Average dived 1.5%, the S&P 500 shed 1.8%, and the Nasdaq Composite plunged 2.6%.
The Australian equities benchmark had bounced back on Monday to close 0.9% higher at 8,249.1 points with energy stocks leading all 11 market sectors into positive territory.
Chief CommSec Economist Ryan Felsman said the tumble on Wall Street and weakness in some commodities overnight provided a negative backdrop for the next equities trading session in Australia.
“Aussie shares are poised to drop and risk appetite remains low in an uncertain macro economic environment,” Felsman said.
He said technology shares in particular came under pressure in the United States where the S&P 500 suffered its largest percentage drop since 18 December.
He said Australian energy producers were expected to come under pressure because OPEC+ plans to increase production pressured crude oil prices while concerns about U.S. tariffs on China and demand in the world’s second largest economy weighed on iron ore prices.
“That backdrop will not help our market, particularly energy producers and miners,” Felsman said.
Weakness would also be expected in stocks trading ex-dividend today including Origin Energy, REA Group and Worley.
In the fixed interest markets, 10-year Australian Treasury bond yields were flat at 4.292% while two-year rates were 0.05% lower at 3.731% respectively.
