Australian markets continued to come under pressure today, as the ASX200 hit new lows of the year in dropping 1.32%, down at 7,786.20. Sentiment has firmly shifted, with the major index down 5% YTD, impacted by the U.S. decision to levy a 25% tariff on Australian steel and aluminium exports. The decision by President Trump not to exempt Australia from these tariffs overnight contributed to the decline.

Karoline Leavitt, a spokeswoman for the White House, confirmed President Trump considered an exemption for Australia but ultimately decided against it. In response, the decision not to retaliate with tariffs of our own stands in contrast to the position of Europe, and that of Canada.

The imposition of these tariffs has triggered a response in various financial markets. While the ASX sectors saw widespread declines, the most affected were retailers, healthcare, and industrials. Significant companies such as BHP, Rio Tinto, Fortescue, Bluescope Steel, and Champion Iron experienced downward pressure on their stock prices.

The level of local market volatility can be seen in the A-VIX (XVI), which is up 42.6% year-to-date at 15.85. Today did in fact mark a slowdown in the A-VIX, down 4% as the price of gold also moved above $US2,900/oz as investors moved towards safer assets amidst heightened market uncertainty.

Interestingly, Australia recorded a surprise trade surplus with the U.S., primarily due to a surge in gold exports. However, domestic economic challenges persist, highlighted by the Insurance Australia Group handling over 4000 cyclone damage claims, resulting in a 1% drop in its shares.

 

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