US president Donald Trump introduced drastic import duties, causing panic in global markets. Investors massively transfer capital to bonds, gold and yen, fearing the tightening of the trade war and the global recession.
On Thursday, April 3, the stock exchanges worldwide reported violent declines. Nasdaq index dropped by 3.2%European markets have lost close to 2%and nipponese Nikkei noted 3% decreaseachieving lowest level in 8 months. This resulted in massive losses throughout Asia.
Giants lose billions
- Apple lost over USD 240 billion marketplace value and its shares fell by 7% in the off-session trade.
- Nvidia noted a decline in capitalisation by 5.6%which translated into USD 153 billion loss.
Profitability 10-year US Treasury Bonds fell by more than 15 basis pointsachieving 4.04% – lowest level in 5 months. Paradoxically, although duties may drive inflation, markets began to value higher probability of interest rate cuts.
– Customs duties will affect the US economy, prices and supply – comments Tai Hui, Asia-Pacific marketplace chief strategist in JP Morgan Asset Management. – There is besides uncertainty among business and consumers, which can be a challenge to growth – he added.
Safe havens at the centre of attention
By Fitch Ratings, the effective rate of import taxation in the USA increased during Trump's regulation from 2.5% in 2024 up to 22% – level unprecedented since 1910. In consequence to announcements of retaliatory action by China and Europeinvestors began to search refuge in conventional "safe havens":
- Gold achieved record level above $3160 per ounce.
- Japanese Jen dic 1%achieving 147.29 JPY/USD.
- Euro gained 0.6%to USD 1,0912.
Despite 50 % work on Chinese exportsBeijing managed to keep comparative stableness of the yuan, limiting its decline to 0.4%. Chinese stock exchanges have besides avoided major shocks:
- Hong Kong lost 1,5 %,
- Shanghai recorded decrease Just 0.5%.
What's next for the global economy?
Customs duties imposed by the USA may accelerate inflation, but besides weaken economical growth. In the coming weeks, responses will be crucial China and the EU – if there is an escalation of trade war, the hazard global recession will increase significantly.
Are investors concerned? Everything points to a yes. In uncertain times gold, yen and bonds stay the main beneficiaries of capital escaping from the equity markets.
More here:
How did the markets respond to Trump's decision on customs?
