The New Zealand dollar fell more than a US cent and Australian futures are pointing to a 4.3% slump for the S&P/ASX 200 index as the antipodes prepares to start the week under the new trade paradigm.
Stocks in Europe and on Wall Street were rocked on Friday as China responded in kind to US President Donald Trump’s widespread tariff regime, triggering widespread selling and heightening fears about the strength of the global economy.
The kiwi dollar sank to 55.96 US cents at 7am in Auckland from 57.33 cents on Friday, while the S&P 500 dropped 6% and Germany’s DAX 30 declined 5%.
“Risk sentiment was already fragile as the new US tariff regime continued to reverberate across markets,” Bank of New Zealand senior interest rate strategist Stuart Ritson said in a note. “The initial catalyst for a renewed bout of weakness came after China escalated the trade war by announcing an extra 34% tariff on US goods and imposed export controls on rare earths.”
More than 50 countries have contacted the White House to start trade talks as Trump seeks to reorder the global trade system, with nations working through their responses. Vietnam and Taiwan have indicated a willingness to cut their tariffs, while Indonesia and India have said they don’t plan to retaliate.
Not all deals
While the spike in market volatility has quashed some deals and initial public offerings in the US, Japanese insurer Dai-ichi Life will buy a 15% stake of Australian insurer Challenger, according to a Nikkei Asia report.
Australian investors are on edge with ASX futures pointing at the steepest decline across the Tasman since the height of the covid pandemic.
The Australian stock market operator’s ability to cope with increased trading volumes is also in view, with the CHESS clearing and settlement system’s reliability under the regulatory microscope.
There’s no local data scheduled for today, with investors looking towards the Reserve Bank’s policy review on Wednesday. The central bank is expected to cut the official cash rate a quarter-point to 3.5%, with market pricing an outside chance of steeper reductions later this year.
Reporting by Paul McBeth. Image from Jakub Żerdzicki on Unsplash.
