Latest News

Dollar falls amid Trump tariffs, as fears of recession fuel US stock market decline

The dollar fell on Thursday as U.S. President Donald Trump’s trade tariffs caused investors to flee for safe havens like bonds and yen.

S&P 500 companies have lost $2.4 trillion combined in market value. This is their largest one-day drop since the global coronavirus pandemic began on March 16, 2019.

Nasdaq composite index led declines

Wall Street ended the day with a 5.97% decline, its largest daily drop since March 2020. The S&P 500, Dow Jones Industrial Average, and Dow Jones Industrial Average also posted their largest daily percentage drops since June 2020.

The new 10% baseline tariff on imported products and the retaliatory tariffs that Trump imposed on dozens countries with unfair trade barriers shook traders.

Investors are concerned that a full-blown dispute over trade could lead to a global economic slowdown, and even inflation. The latest round of U.S. tariffs has hit a world economy still recovering from the inflation spike after the pandemic and dealing with geopolitical tensions.

Peter Tuz of Chase Investment Counsel, Charlottesville, Virginia, said: "Markets plunged today. I view it as an almost complete reset of how investors will think going forward."

The market is lowering expectations for revenue and earnings in the U.S. and around the world. The market reflects reduced growth, decreased earnings, and reduced revenue.

Apple shares fell by 9.2% due to the tariffs imposed on China, where the company does most of its manufacturing. Amazon.com fell 9%, Microsoft dropped 2.4%, while Nvidia dropped 7.8%.

The S&P 500 Technology index dropped 6.9%. S&P 500's energy sector fell 7.5% with oil prices dropping more than 6% in a single day.

The CBOE Volatility Index, also known as Wall Street’s Fear Gauge, has risen to 30,02, its highest level since August 5, 2020.

The Dow dropped 1,679.39, or 3.98% to 40,545.93. The S&P 500 fell 274.45, or 4.84% to 5,396.52 while the Nasdaq Composite fell 1,050.44 or 5.97% to 16,550.61.

MSCI's global stock index fell 28.47, or 3.41% to 807.64. This was its largest daily percentage drop since June 2022.

U.S. dollar

Also, the dollar weakened dramatically. The dollar dropped 1.95% to 146.445 Japanese yen and fell 2.35% to the Swiss franc.

RECIPROCAL LEVY

The 27-country EU block in Europe now faces a reciprocal 20% levy. The pan-European STOXX 600 Index fell by 2.57%.

Trump's tariffs were particularly harsh on Asia. China received a reciprocal tariff of 34%, Japan was hit by 24%, South Korea with 25%, and Vietnam with 46%.

Nigel Green is the CEO of deVere Group, a global financial advisory firm. He said: "This is what you do when you claim to supercharge the economic engine of the world."

The rush to buy ultra-safe government securities that guarantee a steady income has driven down U.S. Treasury rates.

The yield on the benchmark 10-year Treasury bill in the United States fell 14.6 basis points, to 4,049%. It had previously fallen to 4.004%. This was its lowest level since November 25. The yield of the 10-year Treasury note is on course for its largest daily decline since August 2.

The yields on government bonds in the Eurozone fell, with Germany's 10-year bond yield, which is the benchmark for the region, reaching its lowest level since March 4.

If tariffs cause recessions, the central banks of the world will likely lower interest rates. This is good for bonds.

Fitch, a credit rating agency, warned that they could be a game-changer for the U.S. economy and global economies. Deutsche Bank said it was a moment "once in a life time" which could reduce U.S. economic growth by 1%-1.5% this year.

Oil prices

Dropped

After Trump announced his new trade tariffs, OPEC+ agreed on a surprise production increase. Brent futures ended at $70.14 per barrel, down by $4.81 or 6.42%. U.S. West Texas Intermediate Crude Futures ended at $66.95 per barrel, down by $4.76 or 6.64%.

Gold reached a record-high above $3,160 per ounce but then lost steam. Last, spot gold fell 0.85% to $3,106.99 per ounce.

(source: Reuters)