Apr 3, 2025, 07:03 GMT+2 On Thursday, stocks plummeted and investors sought refuge in bonds, gold, and the yen, fearing that new U.S. tariffs had intensified the trade war that threatens to push the world into recession. The dollar hit six-month lows, falling along with U.S. Treasury yields, after President Donald Trump imposed tariffs that raised the effective taxes on imports to the highest levels in a century. "This is a watershed moment, not just for the U.S. economy but also for the global economy," said Olu Sonola, head of U.S. economic research at Fitch Ratings. "Many countries will likely end up in recession. Most forecasts can be thrown out the window if this tariff remains in place for an extended period of time." Nasdaq futures NQ1! fell 3.2%, European futures fell by almost 2%, and the 3% drop in Tokyo's Nikkei—which hit eight-month lows—led to heavy losses across Asia.
Nasdaq futures fell by 3.2%, European futures FESX1! fell by almost 2%, and the 3% drop in the Nikkei in Tokyo—which hit eight-month lows—led to heavy losses across Asia. Apple's market capitalization AAPL fell by over $240 billion, while its shares dropped 7% in after-hours trading. Nvidia's market capitalization fell by 5.6%, rivaling $153 billion.
Apple's market capitalization has fallen by over $240 billion, while its shares dropped 7% in after-hours trading. Nvidia's market capitalization NVDA fell by 5.6%, rivaling $153 billion. The benchmark yield on 10-year US Treasuries US10Y fell by over 15 basis points to a five-month low of 4.04%, and markets priced in a greater chance of interest rate cuts, even though tariffs could cause a sharp spike in US inflation.
The benchmark yields on 10-year US Treasuries US10Y fell by more than 15 basis points to a five-month low of 4.04%, and markets priced in a greater chance of interest rate cuts, even though tariffs could cause a sharp spike in US inflation. Tai Hui, chief market strategist for Asia-Pacific at J.P. Morgan Asset Management, said: "We will have a supply-side shock through tariffs on the US economy and prices." "And then (there is) uncertainty when it comes to businesses and consumers, both of which could be problematic for growth." Trump announced a base tariff of 10% on imports, with much higher levies on some trading partners, particularly in Asia. China was hit with a 34% levy, Japan 24%, Vietnam 46%, and South Korea 25%. The European Union was hit with a 20% levy. According to Fitch Ratings, the effective import tax rate in the United States rose to 22% under Trump from just 2.5% in 2024, reaching levels last seen around 1910. Vietnamese stocks VNINDEX plunged 6%.
Vietnamese stocks VNINDEX collapsed by 6%. FOCUS ON CHINA In view of the promised countermeasures from China and Europe, investors bought safe-haven assets and sold exposure to global growth. Oil, an indicator of economic activity, fell by more than 2%, settling at $73.28 a barrel for Brent futures BRN1!. Australian stocks and the Australian dollar fell.
Oil, an indicator of economic activity, fell by more than 2%, settling at $73.28 per barrel for Brent futures BRN1!. Australian stocks and the Australian dollar fell. Gold GOLD hit a record high above $3,160 an ounce and the Japanese yen jumped more than 1% to 147.29 per dollar, as currency traders sought safety outside the US dollar.
The euro EURUSD rose by 0.6% to 1.0912 dollars.
The euro EURUSD rose 0.6% to $1.0912. China, for now, has kept its currency relatively stable, limiting the yuan's decline to about 0.4% despite hefty overall tariffs of over 50% on Chinese exports and the blow to Vietnam, seen as the closure of a popular bypass route. China's large domestic economy and hopes for support from Beijing have limited losses in Hong Kong stocks HSI to about 1.5% and Shanghai to about 0.5%.
The large Chinese domestic economy and the hope for support from Beijing have limited the losses of Hong Kong stocks to about 1.5% and Shanghai 000001 to about 0.5%. "The main focus in the coming days should clearly be China," said George Saravelos, strategist at Deutsche Bank. "How long will China be willing to wait for trade negotiations... or to absorb this?" he said. "Or will it try to 'export' the shock... through a devaluation of the yuan?"
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