Qantas lost 1.6 per cent after customer data stolen during its cyber incident in July was released online at the weekend. The iron ore heavyweights weighed on the mining sector, with BHP falling 1.5 per cent, Fortescue Metals down 1.6 per cent and Rio Tinto down 1.1 per cent.
Treasury Wines Estates’ shares dived 15 per cent after the company scrapped its full-year earnings guidance and warned that its premium brand, Penfolds, would miss its earnings targets.
Pokies maker Ainsworth Game Technology dropped 1.4 per cent after saying its chief executive Harald Neumann had stepped down with immediate effect after the Nevada Gaming Control Board in Las Vegas wouldn’t give him a gaming licence for the casino state last week.
Bucking the losing trend were gold miners, which benefited as the gold price went back up above $4000 an ounce over the trade tension flare-up between the US and China. Northern Star climbed 1.5 per cent, Evolution Mining gained 2.6 per cent and Newmont rose 2.9 per cent.
Rare earths miners rallied after this masthead reported on Sunday that the Albanese government was considering minimum prices for critical minerals and pumping money into new rare earth projects as part of a potential resources deal with the US. The Pentagon is looking to buy as much as $US1 billion of critical minerals to stockpile, the Financial Times said. Lynas pared earlier gains to close 2.7 per cent higher and Iluka gained 2.3 per cent. BHP closed 0.8 per cent weaker and Rio Tinto closed flat.
The latest trade spat between the world’s largest economies had led to widespread drops across Wall Street on Friday, with roughly six out of every seven stocks within the S&P 500 falling. Nearly everything weakened, from tech giants such as Nvidia and Apple to stocks of smaller companies looking to get past uncertainty about tariffs and trade.
‘That was clearly not something traders wanted to hear. Things got ugly quickly.’
Interactive Brokers’ Steve Sosnick
Wall Street’s chief fear gauge, the Cboe Volatility Index, or VIX, topped 20 for the first time since April – a level that typically signals mounting market stress.
US stocks had been heading for a slight gain on Friday until Trump’s tariff threat. He’s upset at restrictions China has placed on exports of its rare earths, which are materials critical for the manufacturing of everything from consumer electronics to jet engines.
“We have been contacted by other countries who are extremely angry at this great trade hostility, which came out of nowhere,” Trump wrote on Truth Social. He also said “now there seems to be no reason” to meet with China’s leader, Xi Jinping, after earlier agreeing to do so as part of an upcoming trip to South Korea.
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“That was clearly not something traders wanted to hear. Things got ugly quickly,” said Steve Sosnick, chief strategist at Interactive Brokers in a note titled “Tariff Rug Pull”. “The reactions may say as much about recent market complacency as they do about the policy ramifications.”
Over the weekend, the US president sought to cool tensions by claiming Xi “had a bad moment” when announcing China’s new export controls.
“Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment. He doesn’t want depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!!” he wrote on Truth Social on Sunday.
The latest comments sparked a wave of claims of another case of “Taco” – Trump always chickens out. The acronym has gained popularity on Wall Street as a shorthand for his behaviour over tariffs.
Meanwhile, US Vice President J.D. Vance called on Beijing to “choose the path of reason”, claiming that Trump has more leverage if the fight drags on.
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China on Sunday said the US should stop threatening it with higher tariffs and urged further negotiations to resolve outstanding trade issues, adding it would not hesitate to retaliate should Washington persist in its measures against Beijing.
US stocks had already been facing criticism that their prices had shot too high following the S&P 500’s nearly relentless 35 per cent run from a low in April. The index is still near its all-time high set earlier in the week.
Critics say the market looks too expensive after prices rose much faster than corporate profits. Worries are particularly high about companies in the artificial intelligence industry, in which pessimists see echoes of the 2000 dotcom bubble that imploded. For stocks to look less expensive, either their prices need to fall or companies’ profits need to rise.
“With markets already ripe for a pullback, the latest trade threats to China from President [Donald] Trump were the tipping point to a broad sell-off in equities,” said Charlie Ripley at Allianz Investment Management.
In the bond market, the yield on the 10-year Treasury sank to 4.05 per cent from 4.14 per cent late on Thursday.
It had already been lower before Trump made his threats, as a report from the University of Michigan suggested that sentiment among US consumers remained in the doldrums.
with AAP, AP and Bloomberg
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