Global Markets Plunge Amidst Tariffs and Trade War

Global financial markets are facing significant challenges as trade tensions between the United States and other major economies escalate.

Asian and Australian stock markets have suffered substantial losses for the second consecutive day, with the Nikkei 225 seeing an additional 2.75% pullback on the day to plunge the index into a negative 14% on the YTD. These losses are part of a broader trend, as U.S. markets experienced their worst day since the onset of the COVID-19 pandemic five years ago yesterday, and follow it up with another terrible day for the bulls. The Nasdaq 100 is down 3% in early trading, the S&P 500 has lost a further 2.95%, and the DJIA 2.46%.

In addition to stock market turmoil, the oil market is also seeing dramatic shifts. The price of oil has decreased for the second day in a row, reaching its lowest level since late 2021. The price of Brent crude has dropped more than 10%, with West Texas Intermediate (WTI) oil has fallen to $62 per barrel.

Amidst these economic challenges, European markets opened to losses as well. Notably, Germany's DAX index fell by nearly 3.39%, while the French CAC 40 index lost 3.5%.

Amid these tensions, Belgium’s Premier Bart De Wever expressed hopes for a swift resolution to the trade conflict, emphasising the importance of preserving transatlantic partnerships. Meanwhile, China has reacted to the U.S. tariffs by imposing its own 34% tariff on American goods and threatens further retaliatory measures.

In currency markets, the U.S. dollar has again declined, erasing all gains since President Trump’s re-election.

Volatility is up at levels not seen in a long time, with the VIX index, the markets ‘fear gauge' having added a further 25% in early trading to push the mark above 37.