US President Donald Trump speaks after signing executive orders in the Oval Office
The ASX saw a drop of at least AU$26 billion as global markets tumbled, driven by concerns that the United States might enter a recession due to President Donald Trump's trade policies. AFP

The Australian Securities Exchange (ASX) saw a drop of at least AU$26 billion as global markets tumbled, driven by concerns that the United States might enter a recession due to President Donald Trump's trade policies.

The ASX opened at a seven-month low, falling 101.6 points, or 1.3%, at 10:15 am. By midday, the ASX 200 had fallen about 1.8%, wiping out more than AU$50 billion off the bourse. However, the market managed to recover somewhat, closing down 0.9%, still resulting in a loss of at least AU$26 billion, Sky News reported.

The drop came after a US stock market's sell-off on Wall Street the previous day, as investors questioned the potential economic impact of Trump's trade decisions.

These concerns were heightened by Trump's plans to impose large tariffs on countries like Canada and Mexico, in addition to his ongoing trade war with China.

His policies could have direct negative effects on Australia.

Asked if he was expecting a recession in 2025, Trump said: "I hate to predict things like that."

He added, "There is a period of transition because what we're doing is very big. We're bringing wealth back to America. That's a big thing. It takes a little time. It takes a little time."

Many sectors were impacted, with technology stocks taking a hard hit. Companies like WiseTech, Xero, and Technology One saw losses of up to 5.6%.

Elon Musk's Tesla experienced its biggest drop since 2020, dropping by 15%, following a decline in sales.

JPMorgan economists warned that there is a 40% chance of a US recession this year, with other major US banks estimating a 15-30% chance.

The uncertainty has caused significant volatility, with the S&P 500 seeing large daily swings as Trump's fluctuating tariff plans create market instability.

Australian entrepreneur and investor Anton Tagliaferro, however, noted that the decline in major US tech stocks could be a natural market correction after years of rapid growth.

"The US market has been led a lot by the NASDAQ (and) the magnificent seven," Tagliaferro said. "All the AI hype, you could say it's gotten a bit overhyped – it needed a correction. It's almost been a one way bet since COVID."