Miners boost ASX, banks slump; Wall Street enters correction after Trump escalates trade war

The dizzying, battering swings for stocks have been coming not just day to day but also hour to hour, and the Dow hurtled between a slight gain and a drop of 689 points through Thursday’s trading.

The turbulence is a result of uncertainty about how much pain Trump will let the economy endure through tariffs and other policies in order to reshape the country and world as he wants. The president has said he wants manufacturing jobs back in the United States, along with a smaller US government workforce and other fundamental changes.

Trump’s latest escalation came on Thursday when he threatened 200 per cent tariffs on champagne and other European wines unless the European Union rolled back a “nasty” tariff announced on US whiskey. The EU unveiled that move on Wednesday in response to US tariffs on European steel and aluminium.

US households and businesses have already reported drops in confidence because of all the uncertainty about which tariffs will stick from Trump’s barrage of on- and off-again announcements. That’s raised fears about a pullback in spending that could sap energy from the economy. Some US businesses say they’ve already begun to see a change in their customers’ behaviour because of the uncertainty.

A particularly feared scenario for the economy is one where its growth stagnates, but inflation stays high because of tariffs. Few tools are available in Washington to fix what’s called “stagflation.” If the Federal Reserve were to cut interest rates to boost the economy, for example, that could also push inflation higher.

Good news came on both those economic fronts on Thursday.

One report showed inflation at the wholesale level last month was milder than economists expected. It followed a similarly encouraging report from the prior day on inflation that US consumers are feeling.

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But “the question for markets is whether good news on the inflation front can make itself heard above the noise of the ever-changing tariff story,” said Chris Larkin, managing director, trading and investing, at E-Trade from Morgan Stanley.

A separate report, meanwhile, said fewer US workers applied for unemployment benefits last week than economists expected. It’s the latest signal that the job market remains relatively solid overall. If that can continue, it could allow US consumers to keep spending, and that’s the main engine of the economy.

Elon Musk’s Tesla fell 3 per cent following a rare back-to-back gain, and it’s down more than 40 per cent so far in 2025.

On the winning side of Wall Street was Intel, which jumped 14.6 per cent after naming former board member and semiconductor industry veteran Lip-Bu Tan as its chief executive.

In stock markets abroad, indexes fell across much of Europe and Asia, but the moves were relatively modest.

with AP