Global Markets Experience Turmoil Following U.S. Tariff Announcement
Major stock exchanges witness severe declines and increased volatility after unexpected tariff hike by the Trump administration.
Global financial markets faced significant upheaval following a surprise announcement by U.S. President Donald Trump regarding foreign tariffs.
Until Wednesday afternoon, major market participants had maintained moderate expectations, anticipating a global average tariff increase of between 12% and 15% with implementation slated for May 2023. This timeline was expected to provide countries with an opportunity to negotiate more favorable terms.
However, at approximately 4:05 PM Washington time, Trump revealed a 'flat' tariff of 10%, leading to an immediate downturn in market futures.
The market’s disruption was intensified by the higher-than-expected tariff rates and the lack of prior negotiations with individual countries before these tariffs took effect.
Following this announcement, Wall Street futures turned sharply negative, reflecting immediate investor panic.
Asian markets opened just hours later, showing initial reactions to the news.
The Tokyo Stock Exchange recorded a loss of 6.47%, while Chinese markets appeared more resilient, mitigating some of the immediate losses.
In Europe, however, the aggregate value of leading stock exchanges fell by approximately $1.24 trillion in market capitalization between Thursday and Friday.
In particular, the S&P 500 index on Wall Street saw a staggering decline, losing about $5.4 trillion in value over the same period.
This figure is notably more than double Italy's GDP. The decline was not limited to stock markets; gold, traditionally a safe haven in times of uncertainty, fell by 4%, and WTI crude oil prices plummeted 14%, marking one of the largest declines in recent history.
Investors reported pervasive selling, highlighting a widespread lack of confidence in market stability.
The VIX index, which measures market volatility, surged, nearing 50 points.
This spike is particularly notable, as only two higher peaks were recorded since 1990 — during the COVID-19 crisis in March 2020 and during the financial crisis in October 2008.
Coincidentally, the U.S. dollar experienced only a 1% decline, contrary to expectations amidst widespread market chaos.
The weekend proved unsettling for traders, coinciding with China's announcement of retaliatory tariffs and a hardline stance from various Trump administration officials, which escalated tensions heading into Monday trading.
In response to these developments, executives from major American and British banks held discussions to assess the situation and share their projections for upcoming trading days.
A parallel call occurred among investment leaders of significant European firms, revealing an overall perception of extreme market disorder.
Economic analysts anticipate multiple interest rate cuts from the Federal Reserve and suggest implementation of initiatives akin to quantitative easing to stabilize the economy.
Subsequent trading on Monday saw Asian markets decline further, with Hong Kong reporting losses exceeding 13%.
European exchanges also faced sharp drops, reflecting a turbulent trading environment.
U.S. market indices reacted variably to fluctuating news reports, at one point briefly recovering by three points following the emergence of a rumor regarding tariff freezes.
The 'fear and greed' index, a sentiment gauge calculating investor emotions, recorded a stable value of 4 throughout the day, indicative of heightened anxiety within the marketplace.
Until Wednesday afternoon, major market participants had maintained moderate expectations, anticipating a global average tariff increase of between 12% and 15% with implementation slated for May 2023. This timeline was expected to provide countries with an opportunity to negotiate more favorable terms.
However, at approximately 4:05 PM Washington time, Trump revealed a 'flat' tariff of 10%, leading to an immediate downturn in market futures.
The market’s disruption was intensified by the higher-than-expected tariff rates and the lack of prior negotiations with individual countries before these tariffs took effect.
Following this announcement, Wall Street futures turned sharply negative, reflecting immediate investor panic.
Asian markets opened just hours later, showing initial reactions to the news.
The Tokyo Stock Exchange recorded a loss of 6.47%, while Chinese markets appeared more resilient, mitigating some of the immediate losses.
In Europe, however, the aggregate value of leading stock exchanges fell by approximately $1.24 trillion in market capitalization between Thursday and Friday.
In particular, the S&P 500 index on Wall Street saw a staggering decline, losing about $5.4 trillion in value over the same period.
This figure is notably more than double Italy's GDP. The decline was not limited to stock markets; gold, traditionally a safe haven in times of uncertainty, fell by 4%, and WTI crude oil prices plummeted 14%, marking one of the largest declines in recent history.
Investors reported pervasive selling, highlighting a widespread lack of confidence in market stability.
The VIX index, which measures market volatility, surged, nearing 50 points.
This spike is particularly notable, as only two higher peaks were recorded since 1990 — during the COVID-19 crisis in March 2020 and during the financial crisis in October 2008.
Coincidentally, the U.S. dollar experienced only a 1% decline, contrary to expectations amidst widespread market chaos.
The weekend proved unsettling for traders, coinciding with China's announcement of retaliatory tariffs and a hardline stance from various Trump administration officials, which escalated tensions heading into Monday trading.
In response to these developments, executives from major American and British banks held discussions to assess the situation and share their projections for upcoming trading days.
A parallel call occurred among investment leaders of significant European firms, revealing an overall perception of extreme market disorder.
Economic analysts anticipate multiple interest rate cuts from the Federal Reserve and suggest implementation of initiatives akin to quantitative easing to stabilize the economy.
Subsequent trading on Monday saw Asian markets decline further, with Hong Kong reporting losses exceeding 13%.
European exchanges also faced sharp drops, reflecting a turbulent trading environment.
U.S. market indices reacted variably to fluctuating news reports, at one point briefly recovering by three points following the emergence of a rumor regarding tariff freezes.
The 'fear and greed' index, a sentiment gauge calculating investor emotions, recorded a stable value of 4 throughout the day, indicative of heightened anxiety within the marketplace.
Translation:
Translated by AI
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