US stock market crash: Recession fears grow, global markets fall as Trump’s ‘Liberation Day’ tariffs loom
As President Donald Trump’s “Liberation Day” approaches, stock markets around the world saw declines on Monday, driven by fears of the tariffs set to take effect on Wednesday. From Wall Street to Wellington, New Zealand, global markets faced significant sell-offs ahead of the impending economic moves.
In the US, the S&P 500 dropped by 0.6%, following one of its most significant losses in recent years. The index is poised to close the first quarter of the year with a nearly 6% loss, which would make it the worst quarter in almost three years. While the S&P 500 managed to reduce some of its losses after an early 1.7% decline, the Nasdaq composite, heavily impacted by drops in Tesla, Nvidia, and other Big Tech stocks, plunged by 1.6%, according to news agency AP.
The fall in US markets mirrored a global sell-off, as investors expressed concern that Trump’s upcoming tariffs would exacerbate inflation and slow global economic growth. The tariffs, set to be announced on Wednesday, are designed to match the tax burdens imposed by other nations on the US, with specifics still unclear. Trump has signalled that these moves are in part to bring more manufacturing jobs back to the US
Key Global Market Figures at 1630 GMT
- Tokyo – Nikkei 225: DOWN 4.1% at 35,617.56 points (close)
- New York – Dow: UP less than 0.1% at 41,618.28
- New York – S&P 500: DOWN 0.8% at 5,544.02
- New York – Nasdaq Composite: DOWN 1.6% at 17,041.08
- London – FTSE 100: DOWN 0.9% at 8,582.81 (close)
- Paris – CAC 40: DOWN 1.6% at 7,790.71 (close)
- Frankfurt – DAX: DOWN 1.3% at 22,163.49 (close)
- Hong Kong – Hang Seng Index: DOWN 1.3% at 23,119.58 (close)
- Shanghai – Composite: DOWN 0.5% at 3,335.75 (close)
Trump’s tariffs, designed to match trade barriers imposed by other countries on the U.S., are set to begin on Wednesday. The tariffs have raised concerns that they will increase inflation, potentially leading to a global recession. As uncertainty grows, major stock indices around the world have been hit hard.
The S&P 500 dropped by 0.8%, contributing to its near 6% quarterly loss, which could mark the worst quarter in nearly three years. The Dow Jones Industrial Average showed resilience, edging up slightly by less than 0.1%, while the Nasdaq Composite fell 1.6%, weighed down by declines in major tech stocks like Tesla and Nvidia.
In Asia, the Nikkei 225 in Japan suffered a significant 4.1% drop, while Hong Kong’s Hang Seng and China’s Shanghai Composite also saw losses. Europe was not immune either, with London’s FTSE 100, Paris’ CAC 40, and Frankfurt’s DAX all posting losses of over 1%.
Currency and Commodities
- Euro/dollar: DOWN at $1.0814 from $1.0838 on Friday
- Pound/dollar: DOWN at $1.2921 from $1.2947
- Dollar/yen: DOWN at 149.71 yen from 149.72 yen
- Euro/pound: UP at 83.69 pence from 83.68 pence
In the commodities market, oil prices showed signs of strength despite broader market declines:
- West Texas Intermediate: UP 2.4% at $71.04 per barrel
- Brent North Sea Crude: UP 2.1% at $74.27 per barrel
Gold and Bonds: As stocks fell, safe-haven assets like gold and U.S. Treasury bonds gained. Gold briefly topped $3,160 per ounce, while the yield on the 10-year Treasury dropped to 4.22% from 4.27% late Friday.
Market sentiment
Goldman Sachs economists have raised their forecast for inflation and lowered their U.S. growth projection, now predicting a 35% chance of a recession in the next year, up from 20% previously. The tariffs could further stoke inflationary pressures and hinder global economic growth, prompting businesses and consumers to scale back spending.
The markets remain uncertain about what Trump’s tariffs will ultimately entail. While some analysts are optimistic that the tariffs might be less severe than feared, the continued unpredictability is likely to fuel volatility. Some also worry that the tariffs could add to global economic pain by reducing confidence and prompting businesses to cut jobs.
Tesla and tech stocks lead declines
Among the hardest-hit stocks were Tesla, which fell 4.7%, and Nvidia, which dropped 4.1%, as concerns about overvalued tech stocks lingered. Additionally, United Airlines and Delta Air Lines both saw losses, highlighting concerns that the broader economy might be cooling off.
In mergers and acquisitions news, Mr. Cooper saw a significant rise of 16.6% after announcing its acquisition by Rocket Mortgage in a $9.4 billion deal.
Global impact and rising fears
This worldwide sell-off reflects the growing concern over economic risks tied to the new tariffs, and investors are bracing for further market turbulence as Trump’s tariffs loom. The economic uncertainty surrounding this issue is likely to keep markets on edge, with analysts keeping a close eye on potential ripple effects throughout the global economy.
