Global stock markets experienced a dramatic sell-off on Monday, fueled by growing anxieties that escalating US tariffs will trigger a global economic slowdown, The Associated Press reports.
The market turmoil follows President Donald Trump’s recent announcement of sharply higher US import taxes and retaliatory measures from China.
Asian and European markets bore the brunt of the sell-off, with US indexes also facing heavy pressure. The S&P 500 teetered on the brink of bear market territory in pre-market trading as oil prices continued their downward trend.
Asian Markets Hammered:
Tokyo’s Nikkei 225 index suffered a significant blow, plummeting nearly 8% shortly after opening. Trading was briefly suspended before the index closed down 7.8% at 31,136.58. Chinese markets also felt the impact, with Hong Kong’s Hang Seng dropping 13.2% to 19,828.30 and the Shanghai Composite index losing 7.3% to 3,096.58. Other Asian markets followed suit, with Taiwan’s Taiex plummeting 9.7%, South Korea’s Kospi losing 5.6%, and Australia’s S&P/ASX 200 falling 4.2%.
European Markets Follow Suit:
The downward trend extended to European markets, with Germany’s DAX index briefly falling more than 10% at the open before recovering slightly to trade down 5.8% in the morning. In Paris, the CAC 40 shed 5.8%, while Britain’s FTSE 100 lost 4.9%.
US Futures Signal Further Weakness:
US futures pointed towards further losses, with the S&P 500 futures losing 3.4%, the Dow Jones Industrial Average futures shedding 3.1%, and Nasdaq futures plunging 5.3%. If these losses materialize at the market open, the S&P 500 will officially enter a bear market, defined as a fall of more than 20% from its peak. The index was already down 17.4% as of the end of last week.
Trump Defends Tariff Policy:
Despite the market turmoil, President Trump reiterated his resolve to implement tariffs ranging from 10% to 50% on imported goods. Speaking to reporters aboard Air Force One, he stated that while he didn’t want global markets to fall, he wasn’t concerned about the sell-offs, adding, “sometimes you have to take medicine to fix something.”
Escalating Trade War Fuels Fears:
The heavy selling pressure intensified after China matched Trump’s tariff increases, escalating the trade war and raising concerns of a potential global recession. The market slide overshadowed even a better-than-expected U.S. jobs report, which typically serves as a positive economic indicator.
Oil Prices Plunge on Demand Fears:
Oil prices also experienced a significant drop, with US benchmark crude down $2.30 to $59.69 per barrel and Brent crude falling $2.33 to $63.25 a barrel. The decline was attributed to fears that the tariffs would slow economic growth and consequently reduce demand for fuel.
Currency Markets React:
The US dollar fell against the Japanese yen, which is often seen as a safe haven during times of economic uncertainty. The euro rose against the dollar.
The ongoing trade tensions and market volatility highlight the significant risks to the global economy posed by escalating trade disputes. Investors remain on edge as they await further developments in the trade negotiations between the US and China.
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