Trump Tariffs Slam Global Stocks, Dollar, and Oil

The stock market and the U.S. dollar both fell on Thursday following President Donald Trump’s recent global round of tariffs, which ignited concerns about an impending trade war. Many worry this could lead to a recession and increase inflation rates.

The US currency dropped by up to 2.6 percent against the euro, marking its largest intra-day decline in ten years. It also faced significant depreciation when compared to both the Japanese yen and the British pound.

On stock markets, Wall Street's tech-heavy Nasdaq Composite dove around six percent, while the retreat in the S&P 500 was its biggest in a day since 2020.

"Both the fall in stock prices and the depreciation of the U.S. dollar significantly reflect investors' trust in President Trump’s trade policies," noted Fawad Razaqzada, an analyst at City Index and FOREX.com.

Shares in apparel companies, which rely on cheap labor in factories abroad, fell sharply with Nike sinking more than 11 percent and Gap tanking more than 20 percent.

Apple, whose iPhones are largely manufactured in China, fell over nine percent.

Shares across various key industries such as automotive, luxury goods, and banking experienced significant declines worldwide.

Stellantis shares dropped by 7.5 percent following an announcement that they would halt manufacturing operations at certain facilities in Canada and Mexico due to the implementation of a 25 percent tariff on cars.

The Nikkei in Tokyo temporarily dropped over four percent. Meanwhile, in Europe, both the Paris and Frankfurt stock exchanges ended the day down by more than three percent.

Oil prices dropped by over six percent due to worries that an economic slowdown could reduce demand.

Gold, a safe haven asset in times of uncertainty, hit a new peak of $3,167.84 an ounce before retreating somewhat.

The returns on government bonds decreased as investors moved away from volatile investments and shifted their focus towards secure treasury securities.

Renewed rate cuts?

The panic came after the US president unveiled a blitz of harsher-than-expected levies aimed at countries he said had been "ripping off" the United States for years.

The measures included a 34 percent tariff on world number two economy China, 20 percent on the European Union and 24 percent on Japan.

Several others will encounter tariffs customized for them, and for the remaining countries, Trump stated he would enforce a standard tariff rate of 10%, which includes the United Kingdom.

"Unsurprisingly, markets have responded negatively," observed Richard Carter, who leads fixed income research at wealth management firm Quilter.

(US) Treasury yields have dropped significantly, as investors flee and seek out safe-haven assets.

This implies that the Federal Reserve may have to propose further interest rate reductions to avoid triggering a recession; however, if it encounters increasing inflation, it could find itself in a difficult position, as noted by Carter.

Amidst the decline of global markets, Trump admitted to the impact caused by his tariffs, comparing it to a necessary medical "procedure," yet he asserted that the U.S. economy would come out "much stronger" as a result.

The White House press secretary, Karoline Leavitt, seemed to dismiss the idea that Trump would withdraw any of the tariffs prior to their implementation over the upcoming weekend.

"She stated on CNN that the president was firm about this not being a negotiation," she said yesterday.

Nevertheless, Trump subsequently stated that he would engage in negotiations provided they offer something beneficial.

Investors are preparing for potential counteractions, yet governments have also indicated their willingness to engage in discussions.

China pledged to implement "retaliatory measures" and called on Washington to rescind the tariffs, emphasizing the need for talks.

The European Union President, Ursula von der Leyen, stated that the EU was "readying additional retaliatory actions," yet she stressed that "it is still possible to resolve these issues via talks."

Key individuals at approximately 2200 GMT

New York - Dow: Down 4.0% at 40,545.93 (closing value)

New York - S&P 500: Fell 4.8 percent to close at 5,396.52

New York - Nasdaq Composite: Fell 6.0 percent to close at 16,550.61

Paris - CAC 40: Down 3.3% to close at 7,598.98

Frankfurt - DAX: Decreased by 3.0 percent to close at 21,717.39

London - FTSE 100: DOWN 1.6 percent at 8,474.74 (close)

Tokyo - Nikkei 225: DOWN 2.8 percent at 34,735.93 (close)

Hong Kong - Hang Seng Index: DOWN 1.5 percent at 22,849.81 (close)

Shanghai - Composite: DOWN 0.2 percent at 3,342.01 (close)

Euro/dollar: UP at $1.1050 from $1.0853 on Wednesday

Pound/dollar: Increased to $1.3099 from $1.3007

Dollar/yen: FELL to 145.99 yen from 149.28 yen

Euro/pound: Increased to 84.34 pence from 83.44 pence

West Texas Intermediate: DECLINED BY 6.6 Percent to $66.95 Per Barrel

Brent North Sea Crude: Down 6.4% at $70.14 per barrel