Global Markets Tumble Amidst New U.S. Tariffs
- NexxtGen Markets
- Apr 3
- 3 min read
Here's your latest update from the team at NexxtGen Markets here in the City of London.
On April 2, 2025, U.S. President Donald Trump announced a sweeping set of tariffs, referred to as the "Liberation Day" tariffs, imposing a minimum 10% duty on all U.S. imports, with certain countries facing significantly higher rates—China being subjected to a 54% tariff. This aggressive trade policy has sent shockwaves through global financial markets, igniting fears of a protracted trade war and potential global recession.
Global Market Reactions
Asian Markets
Asian equities bore the brunt of the initial market reaction:
Japan's Nikkei 225: Plunged 3.4% in response to the tariff announcement. Major Japanese corporations, including Mitsubishi UFJ and Toyota, experienced significant losses.
Hong Kong's Hang Seng Index: Declined by 1.6%, reflecting investor apprehension over the escalating trade tensions.
South Korea's Kospi: Fell 2%, with technology and export-driven stocks leading the downturn.
Australia's ASX 200: Dropped 2%, as concerns mounted over the impact on commodity exports and broader economic implications.
European Markets
European markets also faced significant declines:
FTSE Futures: Fell 1.8%, indicating a bearish outlook for UK equities.
European Stock Futures: Declined nearly 2%, as investors grappled with the potential for retaliatory measures and disrupted trade flows.
U.S. Markets
U.S. stock futures signalled a turbulent session ahead:
S&P 500 Futures: Dropped 3.3%, reflecting widespread concern over the economic impact of the tariffs.
Nasdaq Futures: Tumbled 4%, with technology giants like Apple, Amazon, and Nvidia experiencing significant after-hours losses due to their reliance on global supply chains.
Dow Jones Futures: Plummeted over 1,000 points, underscoring the severity of investor anxiety.
Sectoral Impact
Technology Sector
The technology sector faced pronounced pressure:
Apple Inc.: Shares fell nearly 7% in after-hours trading, as the company heavily depends on Chinese manufacturing.
Nvidia Corp.: Experienced a sharp decline, reflecting concerns over supply chain disruptions and increased production costs.
Commodities
Commodities markets exhibited mixed reactions:
Gold: Surged to a record high above $3,160 an ounce, as investors sought safe-haven assets amidst market volatility.
Oil: Declined more than 3%, with Brent futures settling at $72.56 a barrel, reflecting concerns over reduced global demand.
Central Bank Responses
The Reserve Bank of Australia (RBA) issued a cautionary statement, highlighting that the U.S. government's new tariff policies could significantly harm global economic growth. The RBA emphasised that such uncertainty could dampen global business and consumer spending, increase borrowing costs for firms, and destabilise financial markets.
Investor Sentiment
Market analysts have expressed deep concerns over the potential for a global recession, higher inflation, and stagflation reminiscent of the 1970s. Economist Stephen Miller estimates a better-than-50% chance of a global recession in 2025. Businesses are already facing pressures to raise prices amidst dampened consumer and corporate spending forecasts.
The introduction of the "Liberation Day" tariffs by the U.S. has precipitated significant volatility across global financial markets, with pronounced impacts on equities, commodities, and investor sentiment. As the situation evolves, market participants should remain vigilant, closely monitor developments, and consider strategic adjustments to navigate the heightened uncertainty.
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