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Stocks Plunge as Trump’s Tariffs Trigger Market Turmoil
Global financial markets experienced significant upheaval on Thursday as stock prices plummeted and investors sought refuge in safe-haven assets like bonds, gold, and the yen. This flight to safety followed the announcement by Donald Trump of unexpectedly broad tariffs, creating a substantial barrier to global trade and disrupting established supply chains within the world’s largest economy. The technology sector faced particularly heavy selling pressure in today’s market.
Tech Sector Suffers Amidst Tariff Hikes
The technology sector was particularly hard hit as manufacturing centers in China and Taiwan confronted new tariffs exceeding 30%. Overall, exports from China to the United States now face a cumulative tariff burden of 54%.
“The effective tariff rate imposed by the U.S. on all imports appears to be at its highest point in over a century,” noted Ben Wiltshire, global rates trading strategist at Citi.
Nasdaq futures sharply declined by 3.3%, and after-hours trading saw approximately $760 billion erased from the market capitalization of the “Magnificent Seven” technology giants. Apple shares, particularly vulnerable due to iPhone production in China, experienced a drop of nearly 7%.
Global Market Indices React Negatively
Broader market indices also reflected the negative sentiment. S&P 500 futures decreased by 2.7%, FTSE futures fell by 1.6%, and European futures experienced a decline of almost 2%.
Safe-Haven Assets Surge
In contrast to equities, gold prices reached a record high, surpassing $3,160 per ounce. Oil, often considered an indicator of global economic growth, fell by more than 2%, pushing benchmark Brent crude futures down to $73.24 a barrel.
Asian Markets Heavily Impacted
Japan’s Nikkei index fell by 2.8% after earlier reaching an eight-month low, with almost all components of the index declining. Shipping firms, banks, insurance companies, and exporters were particularly affected.
MSCI’s broadest index of Asia-Pacific shares outside Japan also declined by over 1% across the region.
South Korea’s Kospi index fell by 2%. Van Eck’s Vietnam ETF saw a decrease of more than 8% in after-hours trading. Australian shares also declined by 2%.
Markets in Taiwan were closed for a public holiday.
Currency and Bond Markets Respond
China’s yuan weakened to its lowest level since February 13th in onshore trading, reaching 7.3060 per dollar, mirroring its offshore counterpart which had earlier bottomed at a two-month low. Trump’s administration also closed a loophole utilized for shipping low-value packages from China, potentially impacting major online retailers.
Ten-year Japanese government bond futures experienced their most significant surge in eight months as investors sought safety.
Economist’s View on Tariff Implications
“The newly announced tariffs present a significant risk to global trade,” commented Zhiwei Zhang, chief economist at Pinpoint Asset Management in Hong Kong.
“Supply chains within East Asia are facing particular strain as a result of these measures.”
The US dollar strengthened against most Asian currencies in volatile currency trading, with the notable exception of the safe-haven yen, which appreciated to below 148 yen per dollar.
It is widely anticipated that trading partners will retaliate with their own countermeasures, potentially leading to substantial price increases for consumers.
Recessionary Fears on the Horizon
“The tariff levels revealed this morning significantly exceed anticipated levels,” stated Tony Sycamore, market analyst at IG. “If these tariffs are not promptly negotiated downwards, the likelihood of a recession in the U.S. will sharply increase.”