Global stocks suffered a severe blow shortly after President Donald Trump announced a new round of tariffs. Traders are concerned that these new tariffs will increase inflation and slow economic growth. On Thursday, the S&P 500 index dropped by 4.8%. This drop is its largest daily drop since the start of the COVID-19 pandemic in 2020. The hit taken by the Nasdaq was even more pronounced, plummeting almost 6%.
The impacts of the tariff announcement were felt well past U.S. borders. The FTSE 100 share index fell by 3.4%, ending the day at 8,186. At the same time, the Cac 40 and Dax indices dropped, losing 3.9% to 7,302 and 4.8% to 20,769. In particular, HSBC shares fell more than 7%, and UBS shares were down close to 6.7%.
On Thursday, the dollar index fell through the floor by 1.9%, in step with declining equity markets. On Friday, it roared back, jumping 0.6%. This volatility is indicative of the worries traders had about the possible economic consequences of these tariffs.
As a response, China has placed retaliatory tariffs on U.S. goods — at times exceeding 34% starting on April 10. This new development has only deepened the market concern. The tariffs have sparked alarm from economic and policy analysts. They worry that a wider economic downturn could happen in the U.S. and around the world.
Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), commented on the situation, stating that the new tariffs “clearly represent a significant risk to the global outlook at a time of sluggish growth.” This feeling is being expressed by the majority of confused investors who are trying to make sense of today’s market environment.
Russ Mould, investment director at AJ Bell, noted the complexity of the current market dynamics, remarking, “There are so many moving parts that getting your head around the situation [as an investor] isn’t easy.” This unpredictability has prompted most traders to take the most risk-averse route to short a trade.
In contrast to all that chaos, the president is sounding positive notes about what’s ahead economically – saying that “the markets are going to boom.” His statement certainly is opposite to how most investors are currently experiencing. They are increasingly sensitive to sudden jumps in cost and skittish about worsening growth outlooks due to the tariffs that have just begun to take effect.