Trump Shakes Up Markets: Stock Markets Panic as Trade War Threat
Stock markets around the world were thrown into chaos on Monday after U.S. President Donald Trump's blunt remarks about his plans to extend tariffs to virtually every country added to the anxiety of investors already worried about the growing threat of a global trade conflict that could push the world economy into recession.
Tariffs for all: Hopes for easing have collapsed
During a conversation with reporters on board the presidential jet Air Force One, Trump made it clear: there will be no exceptions. These words have dashed all expectations that the tariffs could be partially limited. Already on Tuesday, he will receive recommendations on this issue, and on Wednesday, he will announce the starting levels of tariffs. On Thursday, it is expected that the introduction of tariffs on imported cars may be announced.
Investors flee to safe havens: gold and yen are growing
Amid growing uncertainty, market participants flocked to safe haven assets. The Japanese yen strengthened, government bonds became the object of increased demand, and gold soared in price, reaching record highs.
Futures in the minus: investors are losing confidence
Futures on the S&P 500 fell by 0.8%, continuing the decline that began on Friday. Nasdaq futures fell even deeper into the red — minus 1.4%. European indices also took a hit: EUROSTOXX 50 fell by 0.8%, and FTSE and DAX — by 0.5% each.
Brussels is ready for battle — and for dialogue
Germany, through Chancellor Olaf Scholz, announced that the European Union will not stand aside: retaliatory measures in the form of mirror tariffs are already being discussed. At the same time, behind the scenes, information appeared that Brussels is also considering an alternative scenario — a package of concessions that could be offered to the United States as a compromise.
Japanese market under attack: auto giants in deep decline
The biggest decline in the Asian region was shown by the Japanese Nikkei index, which fell by 4.1% — this is its worst performance in the last six months. The biggest losses were suffered by shares of automakers: they are in turmoil after Trump's statements about possible 25% tariffs on car imports to the United States.
Asian exchanges could not withstand the pressure
Stock markets in the Asia-Pacific region opened the week with a noticeable minus. The MSCI index, which covers a wide range of stocks in the region (excluding Japan), fell by 1.9%. South Korea's KOSPI index suffered even more, falling by 3%, reflecting the panic of investors.
China is slightly up, but the market is not impressed
Amid the overall negative dynamics, Chinese "blue chips" from the CSI300 index showed a moderate decline of 1.0%. And even news of a slight increase in manufacturing activity in March, which coincided with analysts' forecasts, could not dispel the clouds over the Celestial Empire's exchanges.
Economists warn: tariffs will boomerang back to the US
Many experts are concerned that new tariffs could hurt not only the global economy, but also America itself. The impact could be especially noticeable in the context of the Federal Reserve's limited maneuvers, since rising inflation will make lower interest rates a less effective support tool.
Goldman Sachs revises forecast: recession is not over the horizon
Goldman Sachs has increased the probability of a recession in the US to 35%, compared to the previous estimate of 20%. According to the bank's analysts, Trump could announce a new round of trade restrictions as early as April 2. It is assumed that the average tariff on imports from all US trading partners will be around 15%.
Inflation is growing, consumption is weakening: alarming signals from macroeconomics
Publications on Friday added fuel to the fire. Core inflation in February rose above forecasts - an alarming sign for the Fed, which is forced to balance between rising prices and a slowing economy. At the same time, consumer spending came in below expectations, signaling a cooling in consumer activity.
Friday's Labor Market Data Could Be Crucial
Now all eyes are on Friday's March employment report, which could add to fears of a slowdown if the 140,000 job gains come in below the forecast. Also expected are data on manufacturing, services, trade, and job openings, which could either confirm the worrying forecasts or give markets reason to hope.
Bonds Rise on U.S. Economic Pessimism
The mood in the debt market is one of anxiety, as investors increasingly bet on a slowdown in the U.S. economy that will have a bigger impact than a short-term spike in inflation. As a result, confidence is growing that the Federal Reserve will be forced to cut its key rate, with the average cut expected to be about 79 basis points this year.
Yields Fall: Government Debt Market Sounds Alarm
The risk-off push pushed the yield on 10-year US Treasuries down to 4.206%. Two-year bonds also responded by falling to 3.861%. These levels reflect growing doubts among market participants about the sustainability of economic growth and strengthen expectations for monetary easing.
All Eyes on Powell: Markets Await Signals
The key moment of the week will be the speech of Fed Chairman Jerome Powell on Friday. His words may give markets a clear understanding of the central bank's further course. Before that, a series of comments from other Fed officials are expected, which may also affect the dynamics of expectations.
The dollar weakens: investors seek refuge in the yen and euro
The weakening yields of US bonds also pulled down the dollar: it lost 0.6% against the Japanese yen, falling to 148.90. The euro is holding steady around $1.0835. The broad dollar index is also showing a downward trend, having finished two sessions in the red and settled at 103.880.
Gold sets a record: flight to eternal value
In a situation of high uncertainty, gold has once again proven its reputation as a "safe haven". Its price has reached a new historical maximum of $3,111 per ounce. The growing interest in precious metals has become a reflection of the global flight of investors from risks and unstable assets.
Oil is falling again: the market fears weakening demand
Cautious pessimism remains on the oil market. North Sea Brent crude fell by 30 cents to $73.33 per barrel. American WTI fell by 31 cents and is now trading at $69.05 per barrel. The prospect of a slowdown in economic activity, which could lead to a decrease in global demand for raw materials, is putting pressure on quotes.
Tech giants lose their crown: the Magnificent Seven are under attack
Once symbols of stability and growth, and their shares were a must-have for any self-respecting investment portfolio. But now the so-called "Magnificent Seven" of the largest US tech companies are facing a massive sell-off for the sixth time in a row. The losses are colossal: almost $2 trillion has evaporated from their market capitalization. Against this backdrop, Chinese tech companies (HSTECH index) and European defense firms (SXPARO) have begun to push the American titans out of the investor spotlight.
US Treasuries: Modest but stable yields
Meanwhile, the US bond market is summing up the quarter on a moderately positive note. The yield on benchmark Treasuries, despite the turbulence, provided investors with a profit of 2.7%. The yield itself has fallen by more than 20 basis points over the period, indicating increased demand for US government bonds as a hedge in an unstable environment.
Germany is going all in: lifting the debt brake for the sake of defense
A game-changing precedent has occurred in Europe. Germany, historically restrained in matters of public debt, has announced its intention to temporarily lift the budget cap in order to increase defense spending. The reason is the weakening of military support from the US. This decision caused a sharp jump in German bond yields - by more than 40 basis points, which was the largest quarterly increase since 2023. Most notably, for the first time since 2021, German and US government bonds are moving in opposite directions.
Japan Breaks Tradition: Bonds at 2008 Highs
While Europe's fiscal policy is becoming increasingly aggressive, in Japan all eyes are on the Bank of Japan. Expectations of tighter monetary policy are pushing up yields on Japanese 10-year bonds. JGBs are now trading at levels not seen since 2008. A jump of almost 50 basis points in a quarter is the most significant increase since 2003, which suggests a possible revision of the long-standing low-rate policy.
Dollar Weakness Gives Emerging Currencies a Chance — But Not All
Amid the weakening of the US currency — the DXY dollar index lost 4% — emerging market currencies got a rare opportunity to demonstrate strength. However, the effect was mixed: some currencies were able to strengthen, while others only worsened their positions.
Lira and Rupee Among the Outsiders: Political and Financial Chaos
The Turkish lira was again under pressure — a loss of almost 7%. Investors reacted to the detention of Recep Tayyip Erdogan's key opponent, which increased concerns about domestic political stability.
The picture is not the best in Indonesia either: the rupiah fell to levels not seen since the 1998 crisis. The reason was growing doubts about Jakarta's budget sustainability and alarming signals about the possible return of military influence on the government.
Bitcoin - like a roller coaster
The crypto market, as always, lives by its own, sometimes parallel logic. Bitcoin first soared by 20% against the backdrop of Donald Trump's inauguration, but then followed a sharp fall of almost 30%. The reason is the skeptical reaction of the market to the announced initiative to create a US state crypto reserve, which, according to investors, remains in the realm of loud slogans for now.
The Middle East and the oil market: an unstable truce - unstable prices
Oil quotes continue to rush in both directions. Investors are assessing not only the balance of supply and demand, but also the situation in the Middle East, where the fragile truce between Israel, Hamas and Hezbollah is already looking shaky. Any new flare-up of tension could shake up commodity markets again.
Gold and copper are high, coffee is on the verge of stress
Amid global risks, gold continues to grow steadily, adding 17% since the beginning of the year. Copper is not far behind, adding 11%, despite all fears of an economic slowdown. But the biggest shock is in the coffee market. Arabica prices have soared by 18% in just a quarter and have almost doubled in a year. This is due to a series of droughts that have destroyed crops in key regions of Latin America. Coffee lovers should brace themselves: a cup of the invigorating drink may soon become noticeably more expensive.
