Cryptocurrencies and global markets faced a tumultuous start to the week as President Donald Trump's imposition of tariffs on Canada, Mexico, and China sent shockwaves through the financial world. The tariffs, signed into effect on Saturday, included a 25% levy on imports from Mexico and Canada and a 10% charge on goods from China. This move has intensified market volatility, with major indices and digital currencies experiencing significant declines.
On Monday, the CoinDesk 20 index, which tracks the largest 20 digital assets by market capitalization, plunged 9% in response to the heightened economic tensions. Bitcoin, the leading cryptocurrency, fell back below the critical $100,000 mark, shedding 3.6% to trade at $97,554.24. In contrast, traditional safe-haven assets like gold edged up 0.3% to $2,842.60 per ounce, reflecting investors' cautious sentiment.
In Asia-Pacific, markets opened lower as they reacted to the tariff announcement. Japan's Nikkei 225 dropped 1.99%, while the broader Topix index decreased by 1.87%. Australia's S&P/ASX 200 also fell sharply, losing 1.61%. Meanwhile, India's Nifty 50 and Sensex indices declined by 0.69% and 0.88%, respectively, amid the broader sell-off in equities.
The U.S., which conducts approximately $1.6 trillion in annual trade with Canada, Mexico, and China combined, witnessed significant fluctuations in its stock markets. The S&P 500 slipped 0.50% to close at 6,040.53, while the Dow Jones Industrial Average dropped by 337.47 points, or 0.75%. These declines reflect investors' growing concerns over the potential economic repercussions of the tariffs.
Shares of Alibaba experienced a volatile session in Hong Kong as trading resumed after a three-day break. Initially rising by as much as 5.2%, the stock reversed course to fall nearly 4% by the end of the day. This volatility highlights the jittery market conditions exacerbated by escalating trade tensions.
In addition to geopolitical concerns, tech stocks worldwide have come under pressure due to advancements in artificial intelligence by Chinese AI startup DeepSeek. The company's capabilities have raised competitive concerns among technology firms, adding another layer of complexity to an already turbulent market environment.
Amidst these international developments, India's Union Budget provided some relief to its middle class by announcing significant income tax benefits. However, this positive domestic news was overshadowed by global market instability and falling indices.
Energy markets also reacted to the unfolding trade situation. International Brent crude saw a modest increase of 1%, trading at $76.42 per barrel as investors assessed the potential impact of tariffs on global demand for oil.