The big four bank shares have all dipped to start the week.
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The Big Four banks all sit inside the top ten largest companies on the ASX by market cap.
If you’re not familiar, the big four are:
- Commonwealth Bank of Australia (ASX: CBA)
- National Australia Bank Ltd (ASX: NAB)
- ANZ Group Holdings Ltd (ASX: ANZ)
- Westpac Banking Corp (ASX: WBC)
This means that if you hold these shares, your portfolio might have felt the pinch to start the week, particularly if you have exposure to ETFs that track the S&P/ASX 200 Index (ASX: XJO).
The big four have had a rough start to this week, with all four dropping significantly since Monday’s opening.
- CBA shares have fallen 2.02%
- NAB shares are down 2.35%
- Westpac shares have dropped 2.01%
- ANZ shares are 1.54% lower
So why the sharp fall?
Trump’s tariff timeline
Over the weekend, United States President Donald Trump introduced 25% tariffs on Canadian and Mexican imports and an additional 10% tariff on Chinese goods, which led Canada to respond with a 25% tariff on US goods into Canada.
This saw global (and Australian) markets fall on Monday as investors reacted negatively to the news.
However, before the tariffs went into effect, Mexico and Canada negotiated to delay them by 30 days while the countries discussed border and drug trafficking measures.
Canadian Prime Minister Justin Trudeau shared a statement on social media
According to the post, he had a “good call with President Trump,” and “proposed tariffs will be paused for at least 30 days while we work together.”
At the time of writing, the 10% tariff has come into effect on all Chinese exports to the US.
Why do tariffs impact Australian shares?
Motley Fool Australia’s Chief Investment Officer, Scott Phillips, said on Monday that investors should prepare for more global market volatility on the back of President Donald Trump’s Tariff announcements.
We should prepare for more global market volatility, though, as investors try to work the announced and potential changes into their assessment of value. The ASX fell 2% out of the gate this morning. I don’t do predictions, but I think we can assume we should expect the unexpected, from here.
This sentiment was echoed by The Bull after the ASX 200 dropped 1.79% on Monday.
The broader economic and market reactions illustrate the sensitivity of the ASX 200 to international policy changes, emphasising the interconnected nature of global markets.
Why have the ASX 200 big four bank shares dropped?
Despite Canada and Mexico negotiating a 30-day pause on the proposed tariffs, it remains to be seen if this will result in President Trump withdrawing them altogether or if it’s simply kicking the can down the road.
Amongst global uncertainty and a potential trade war, it’s possible many investors were profit-taking this week.
The big four bank shares have all enjoyed big returns in the last 12 months, with CBA and Westpac shares up more than $36% and NAB shares most 21% higher. ANZ shares are trailing the others but are still up 10.73% in this period.
With many experts predicting volatility, it’s fair enough some investors might have cashed in profits.
Furthermore, Bell Potter currently lists all four of these ASX200 bank shares as trading above their target price. This suggests the broker sees limited upside in the short term.
Long-term holders of these blue-chip stocks might be content to ride this out and take the dividends.
However, prospective buyers might want to keep an eye on the developing situation in the US, which clearly has a trickle-down effect on ASX 200 bank shares.
Motley Fool contributor Aaron Bell has positions in National Australia Bank. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
