On Thursday, stock prices reached unprecedented highs as shares plummeted following U.S. President Donald Trump’s announcement of larger-than-anticipated tariff walls encircling the globe’s biggest economic market, disrupting trade and supply networks.
The technology industry experienced significant declines as manufacturing centers in China and Taiwan encountered additional tariffs exceeding 30%, causing the cumulative new tax rate to soar to a startling 54% on goods imported from China.
“The
The U.S. effective tariff rate on total imported goods
“aim for the highest tier in more than a hundred years,” stated Ben Wiltshire, Citigroup’s global rates trading strategist.
Nasdaq futures tumbled 3.3% and in after-hours trade some $760 billion was wiped from the market value of Magnificent Seven technology leaders. Apple shares, hit hardest as the company makes iPhones in China, were down nearly 7%.
The S&P 500 futures dropped by 2.7%, FTSE futures decreased by 1.6%, and European futures declined by almost 2%.
Gold reached a new peak of over $3,160 per ounce, while oil, which serves as an indicator of worldwide economic health, dropped by more than 2%, setting Brent crude futures at $73.24 a barrel.
Japan’s Nikkei dropped 2.8%, having previously fallen to its lowest point in eight months, with almost all index members declining as stocks related to shipping, banking, insurance, and exports suffered significant losses.
The MSCI’s comprehensive index for Asia-Pacific stocks excluding Japan dropped over 1%.
In Benchmark 10-year Treasury yields fell 14 basis points to reach a five-month low at 4.04%. This decline reflects investor concerns about potential slowing economic growth in the United States. Additionally, interest rate futures now indicate an increased likelihood of future interest rate decreases over the coming months.
“The tariffs are far more extensive and significantly bigger than anticipated,” stated Jeanette Gerraty, chief economist at wealth advisory firm Robertson Stephens located in the U.S. technology hub of Menlo Park, California.
Earlier, people discussed if having more clarity might benefit the market. However, with clear information available now, nobody seems pleased with what they’re seeing.
Risk to global trade
Trump announced a baseline 10% tariff on imports with far higher levies on some trading partners, particularly in Asia.
In addition to China’s 34% duty, Japan faced a 24% tariff, Vietnam encountered a 46% impost, and South Korea grappled with a 25% levy. Meanwhile, the European Union was subjected to a 20% charge.
The Chinese market started off on a pessimistic note, with the CSI300 blue-chip index declining by 0.24% and the Shanghai Composite Index decreasing by 0.1%. Meanwhile, Hong Kong’s Hang Seng Index dropped by 1.6%.
In another development, the Kospi index in South Korea dropped by 2 percent. The Van Eck Vietnam ETF experienced an over 8 percent decline during after-hours trading. Meanwhile, Australian stocks went down by 2 percent. It should be noted that markets in Taiwan were not operational due to a public holiday.
The ten-year Japanese government bond futures saw their largest increase in eight months.
The tariffs unveiled today pose substantial risks to international commerce, according to Zhiwei Zhang, chief economist at Pinpoint Asset Management in Hong Kong. He particularly highlighted the strain on supply chains in East Asia.
The U.S. dollar strengthened compared to most Asian currencies amid volatile trading conditions, but it declined against the Japanese yen, which climbed above the level of 148 yen per dollar as investors sought safer assets.
Trading partners are anticipated to retaliate with measures of their own that might result in significantly increased costs.
The tariff rates announced earlier today significantly surpass initial projections. If these rates are not reduced quickly, there could be a substantial increase in the expectation of an economic downturn in the United States,” noted IG Market Analyst Tony Sycamore.
