The ASX is set for a fall after Wall St took a dive on recession fears to finish with its worst session for 2025.ASX 200 futures are 0.9% lower to 7895 points.
The ASX 200 closed 14 points or 0.18% higher yesterday at 7,962, led by gains in Energy (+1.50%), Materials (+0.89%), and Utilities (+0.58%). The weakest sectors were Telecommunications (-0.79%), Health Care (-0.58%), and Financials (-0.10%).
The S&P/ASX Small Ordinaries (XSO) gained 0.30% yesterday 30 3,064.80. However, it is down 2.93% over the past five trading days.
The domestic economic calendar remains light this week, with Westpac Consumer Sentiment (10:30 am AEDT) and the NAB Business Confidence survey (11:30 am AEDT) as today’s key releases. Trade tensions and tariff concerns could offset the optimism stemming from the Reserve Bank of Australia’s (RBA) mid-February rate cut, likely keeping consumer sentiment flat for March.
In interest rate markets, expectations are building for an 18 basis point (bp) rate cut by the RBA in May, with a total of 63bp in cuts priced in for the remainder of 2025.
US sell-off on recession fears
The selloff in US equities deepened on Monday, with the S&P 500 falling 2.7% and the Nasdaq 100 plunging 3.8%—its worst session since 2022. Among megacap stocks, Tesla (NASDAQ:TSLA) tumbled 15%, while Nvidia dragged a key index of semiconductor stocks to its lowest level since April. The Dow Jones Industrial Average declined 2.1%. The driving force behind the rout? Uncertainty.
Investor anxiety over Donald Trump’s unpredictable tariff threats pushed funds into safe-haven assets. Concerns also mounted over the US president’s sweeping federal employee dismissals—many entangled in legal battles—and his apparent indifference to the risk of a recession, all of which weighed on equities.
When questioned about the potential for a recession, Trump said, "I hate to predict things like that. There is a period of transition because what we’re doing is very big." Meanwhile, Treasury Secretary Scott Bessent’s said on Friday that the US economy likely faces a "detox period" for rebalancing.
However, some investors remain optimistic. “We’ve gone from animal spirits to what are the odds of a recession,” said Gina Bolvin, president of Bolvin Wealth Management Group. “We finally have the correction we were waiting for, and long-term investors will be rewarded again.”
Declines in Europe
European sharemarkets declined on Monday, led by a 3.1% drop in technology stocks as investors globally reduced exposure amid ongoing uncertainty surrounding US tariffs. Novo Nordisk (CSE:NOVOb) fell 8.1% following weaker-than-expected obesity trial results.
- The FTSEurofirst 300 index dropped 1.4%.
- The UK’s FTSE 100 index closed 0.9% lower.
Currencies and commodities
Currencies
Currency movements were mixed against the US dollar in both European and US trade.
- The Euro strengthened from US$1.0805 to US$1.0872 before settling near US$1.0830 at the US close.
- The Australian dollar weakened from US63.29 cents to US62.64 cents, recovering slightly to US62.80 cents.
- The Japanese yen eased from JPY147.78 per US dollar to JPY146.63 before trading near JPY147.30 at the US close.
Commodities
Global oil prices fell 1.5% as concerns mounted that US tariffs on Canada, Mexico, and China could weigh on economic growth and reduce energy demand, even as OPEC+ increased supply.
- Brent crude declined US$1.08, or 1.5%, to US$69.28 per barrel.
- US Nymex crude dropped US$1.01, or 1.5%, to US$66.03 per barrel.
Base metals also retreated, with copper futures down 0.9% on worries over global growth and metals demand amid US trade policies. Aluminium futures declined 0.4%.
- Gold futures shed US$14.70, or 0.5%, to US$2,899.40 an ounce as profit-taking offset safe-haven demand driven by geopolitical uncertainty and anticipation of US inflation data. Spot gold traded near US$2,885 at the US close.
- Iron ore futures slipped US30 cents, or 0.3%, to US$100.99 per tonne as US tariff concerns and China’s commitment to reducing crude steel output clouded demand prospects.