Global stock markets saw a sharp decline on Thursday following US President, Donald Trump’s sweeping tariff announcements.
The UK’s FTSE 100 share index fell by 1.5%, with other European markets following the downward trend, reflecting losses seen earlier in Asia.
Investors are increasingly concerned about the potential global economic impact of Trump’s tariffs, which many fear could lead to inflation and hinder growth. The tariffs have sparked worries over the stability of the global trade system.
In Asia, markets took a hit after the announcement. Japan’s Nikkei closed nearly 3% lower, while Hong Kong’s Hang Seng index dropped 1.5%. Shares in Europe followed suit, with Germany’s Dax index down by 1.9% and France’s Cac 40 falling by 2.6%.
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Meanwhile, gold prices surged to a record high of $3,167.57 an ounce, as investors sought safer assets amidst the market turmoil. However, the price later fell back to $3,090.
Futures markets indicate that US stocks are likely to open lower, with the S&P 500 expected to drop by 3.2% and the Nasdaq, which is heavily composed of tech stocks, set to decline by 3.7%.
The US dollar also weakened against several currencies. The British pound rose by more than 1% to $1.32 before easing off later in the day.
Trump’s decision to impose a combination of a 10% baseline tariff and higher duties on several trading partners marks a significant shift from decades of global trade liberalization. This move is raising concerns about the future of international trade.
“This is the worst-case scenario,” said Jay Hatfield, CEO of Infrastructure Capital Advisors. “Enough to potentially send the US into a recession,” he added, reflecting the anxious market sentiment.
George Saravelos, head of FX at Deutsche Bank Research, described the tariffs as a “highly mechanical” response to trade deficits. “The market may question the extent to which a sufficiently structured planning process for major economic decisions is taking place. After all, this is the biggest trade policy shift from the US in a century,” he noted.
The tariffs have also affected key industries. Shares in sportswear giant Adidas dropped more than 10%, while rival Puma saw a 9% decline, as the tariffs hit major manufacturing countries.
The new tariffs include a 54% levy on US imports from China and a 46% tax on goods from Vietnam. Luxury goods companies were also impacted, with Pandora’s stock falling by 12%, and LVMH (Louis Vuitton Moet Hennessy) dropping 5%.
There are concerns that the tariffs could lead to reduced consumer spending in the US, which represents a substantial portion of the global economy, estimated to be between 10% and 15%.
(BBC)
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