Stocks tumble on Wall Street amid fall in global markets as US tariffs rattle investors
Newsflash: Stocks are tumbling on Wall Street at the start of trading, as New York traders give their verdict on the new trade war unleashed by the White House last night.
As the opening bell rang out across the New York stock exchange, the Dow Jones industrial average, which tracks 30 of the largest US companies, promptly plunged by 1,137 points, or 2.7%, to 41,087 points.
Nike is the biggest faller, sliding by over 10%, while Amazon and Goldman Sachs have both dropped by around 6%.
The broader S&P 500 share index is sliding down too – it’s down 3.3% in early trading.
The tech-focused Nasdaq is being hammered, down 4.5%.
This follows heavy losses in Asia-Pacific markets earlier today, where Vietnam’s main share index slumped by 6.8% after Vietnamese goods were hit with a new 46% tariff.
European markets are deep in the red too, with the UK’s FTSE 100 index is now down 1.6% or 138 points, at 8469 points.
Markets have been shaken by Donald Trump’s new tariffs, which are widely expected to hurt the outlook for global growth and inflation.
Chris Iggo, chief investment officer for Core Investments at AXA, explains:
The sweeping tariff package came in at the high end of expectations and, according to analysts, will increase the effective tariff on imports to the US to between 20% and 25%.
Some analysts suggest that US economic growth could be reduced by 1% to 2% while inflation will move higher. This will be seen as a stagflation for the US economy. Tariffs on goods from the rest of the world should reduce export growth and will be a negative growth shock, with Asia and Europe most affected given the size of the proposed tariff rates.
Key events
Trump’s tarrifs ‘could spark global economic warfare’
Trump’s tarrifs could spark global economic warfare, fears Dr Eric Golson, Associate Professor of Economics at the University of Surrey.
“Lower tariffs were the result of a series of compromises on trade, intellectual property and services in the 1990s. Undoing the trade compromises risk spilling over from trade to full-scale economic warfare. A 24% average weighted tariff is about ten times current US levels. The EU, Chinese and others will definitely consider going after America’s weaknesses including patents and services. American businesses could find themselves fighting a multi-front economic war with their own government on tariffs and everyone one else trying to protect their patents and services.
“Another question that large economic powers could pose in response to these unilateral tariff actions could be around global capital mobility – going right to the core of globalisation.”
Photos: The New York stock market today
It’s unusual to see a trader actually running on the Wall Street trading floor, but this was the scene at the opening bell in New York today:
Other traders were heads-down juggling their buy and sell orders:
Bloomberg have calculated that roughly $1.7 trillion was erased from the S&P 500 Index at the start of trading today.
That highlights just how much shareholder value is being wiped out by the fears that Donald Trump’s new tariffs could push the US into a recession.
The top fallers on the Dow Jones industrial average are Nike (-11%), Apple (-9%), American Express (-8%), Amazon (-7.5%), and Goldman Sachs (-7.4%).
They’re followed by a flurry of other big-name firms: Boeing (-6.8%), Nvidia (-5.4%) JPMorgan (-5%), Caterpillar (-4.9%) Home Depot (-4.8%), Walt Disney (-4.6%) and Salesforce (-4.2%).
US dollar at six-month lows
There’s no respite for the US dollar yet either.
The US currency has now slumped by 2.2% so far today against a basket of other major currencies, to a six-month low.
It’s sharply down against the euro, which has jumped by nearly two and a half cents to trade at $1.109, its highest since the start of October last year.
As we reported earlier, Deutsche Bank has warned there is a risk of a ‘confidence crisis’ in the US dollar.
Francesco Pesole, a currency strategist at ING, has said (via the Financial Times):
“The collapse is a loss of confidence in dollar-denominated assets in general.
“It’s a vote of no confidence on 100 days of Trump.”
Stocks tumble on Wall Street amid fall in global markets as US tariffs rattle investors
Newsflash: Stocks are tumbling on Wall Street at the start of trading, as New York traders give their verdict on the new trade war unleashed by the White House last night.
As the opening bell rang out across the New York stock exchange, the Dow Jones industrial average, which tracks 30 of the largest US companies, promptly plunged by 1,137 points, or 2.7%, to 41,087 points.
Nike is the biggest faller, sliding by over 10%, while Amazon and Goldman Sachs have both dropped by around 6%.
The broader S&P 500 share index is sliding down too – it’s down 3.3% in early trading.
The tech-focused Nasdaq is being hammered, down 4.5%.
This follows heavy losses in Asia-Pacific markets earlier today, where Vietnam’s main share index slumped by 6.8% after Vietnamese goods were hit with a new 46% tariff.
European markets are deep in the red too, with the UK’s FTSE 100 index is now down 1.6% or 138 points, at 8469 points.
Markets have been shaken by Donald Trump’s new tariffs, which are widely expected to hurt the outlook for global growth and inflation.
Chris Iggo, chief investment officer for Core Investments at AXA, explains:
The sweeping tariff package came in at the high end of expectations and, according to analysts, will increase the effective tariff on imports to the US to between 20% and 25%.
Some analysts suggest that US economic growth could be reduced by 1% to 2% while inflation will move higher. This will be seen as a stagflation for the US economy. Tariffs on goods from the rest of the world should reduce export growth and will be a negative growth shock, with Asia and Europe most affected given the size of the proposed tariff rates.
Futures tracking the Nasdaq share index have now tumbled by 4%, as fears of a full-blown trade war grip Wall Street.
Apple has sunk 7.6% in premarket trading, reeling from the impact of an aggregate 54% tariff on China where much of its manufacturing takes place. Microsoft are down 2.7% in the futures market, while chip giant Nvidia is heading for a 6% tumble.
Elias Haddad, senior markets strategist at Brown Brothers Harriman, says:
“This was the first bullet thrown in this trade war and it could get nasty and that is spooking investors. We’re going to continue to trade on a heavy tone because of the heightened risk of either recession or stagflation.
“We could see the correction bottom out when we have firm evidence that we’re not falling into recession.”
Capital Economics slashes S&P 500 forecast
Tensions is mounting on Wall Street as investors brace for stock trading to begin.
Yesterday’s announcement of new global tariffs by Donald Trump was made just after the US stock market closed on Wednesday, so traders will be itching to respond.
The futures market suggests US stocks will suffer heavy losses; the S&P 500 share index is currently down by a hefty 3.7% in pre-market trading.
Confidence in the US stock market has been dented in recent weeks by fears of a global trade war.
Today, Capital Economics have slashed their forecast for the S&P 500’s end-of-year close, to 5,500 points, down from 7,000 points previously.
Their chief markets economist, John Higgins, says:
This is roughly 10% below its closing peak on 19th February and not far from where it may open today after some initial fall-out from the tariff news.
Higgins adds that there are two reasons for this “significant” downgrade:
The first is yesterday’s announcement of greater tariffs on US imports than we had assumed. In such circumstances, we no longer think the economic backdrop will be sufficiently conducive to a rally in equities. The second is a recent shift in the AI narrative, which has shaken our conviction that big-tech will drive up the index.
US commerce secretary Howard Lutnick has said that the Trump administration is talking to all major trading partners throughout the world about ways to bring down the new tariffs announced last night.
Speaking to CNBC, Lutnick explained that other countries will have to change their rules to allow more imports of US products.
He says:
“The key is, will they take our agricultural products? Will they treat us fairly? Can they treat us fairly? And the answer is, over time, that is going to be yes.
“American products are going to be better sold elsewhere in the world.”
China’s credit rating downgraded
Newsflash: Ratings agency Fitch has cut its credit rating on China.
Fitch has downgraded China’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘A’ from ‘A+’, with a stable outlook.
Fitch says it acted due to China’s rising debts, and deteriorating public finances:
The downgrade reflects our expectations of a continued weakening of China’s public finances and a rapidly rising public debt trajectory during the country’s economic transition. In our view, sustained fiscal stimulus will be deployed to support growth, amid subdued domestic demand, rising tariffs and deflationary pressures.
This support, along with a structural erosion in the revenue base, will likely keep fiscal deficits high. We expect the government debt/GDP to continue its sharp upward trend over the next few years, driven by these high deficits, ongoing crystallisation of contingent liabilities and subdued nominal GDP growth.
This does not appear to be a direct response to Donald Trump’s decision to impose a new 34% tariff rate on China.
Fitch says it has not yet calculated the impact, explaining:
While the 2 April reciprocal tariff announcements are not yet incorporated into our forecasts and there is uncertainty about their impact, there is headroom at the current rating to accommodate the likely implications for economic growth and fiscal metrics.
Analysts at Oxford Economics have calculated that a global recession is likely to be avoided, despite the huge impact of yesterday’s ‘Liberation Day’ tariff hikes
In a report issued today, their Director of Global Macro Research, Ben May, predicts that annual global GDP growth could plausibly fall below 2%.
He writes:
“This would still be some way off the technical definition of a global recession – for this to happen, GDP growth would need to fall below the rate of world population growth, which is currently about 0.9% in annual terms. Nonetheless, it would be the weakest annual growth rate since the global financial crisis, excluding the pandemic period.”
Oil slides on fears tariffs will hurt global growth
The oil price is cratering, on growing fears that Donald Trump’s trade war could trigger a recession.
Brent crude has now plunged by 5.8% so far today to $70.61 per barrel.
US crude is being hit even harder, down 6% at $67.34 per barrel.
David Morrison, senior market analyst at Trade Nation, says oil has fallen as the scale and scope of Trump’s tariffs, and their impact on the global economy, became apparent.
Energy imports are largely unaffected tariff-wise. But investors were reacting to the estimated damage these tariffs could do to global trade, and therefore global economic growth.
The size of the tariffs are such that business activity could slow sharply, leading to significantly lower demand for oil.
Paul Diggle, chief economist at Aberdeen, suggests the White House may not be displeased by the market reaction.
Diggle says:
So far, the administration appears far more tolerant of market weakness than in Trump’s first term. Indeed, low bond yields and a weaker dollar may be actively helpful market moves give the administration’s preferences.
Diggle also warns that yesterday’s “dramatic” announcements may not represent “peak tariffs”.
He adds:
We still think additional sector specific tariffs are coming, including on semiconductors, copper, lumber and pharmaceuticals.
Indeed, these products were mentioned in the executive order, specifying that the reciprocal tariff policy does not apply to them, therefore leaving open that specific rates will be coming soon. On the other hand, that does seem to mean that sector-specific tariffs and reciprocal tariffs aren’t additive.
Additionally, the Executive Order provides the President with the right to modify tariff rates in the event of retaliatory measures, meaning rates on some trade partners could be pushed higher still.
There is still scope for US tariffs to eventually settle at a lower level, and this is probably still a widespread expectation.
The 10% global baseline is likely a floor, but structuring the reciprocal tariff as an additional rate on top of that at least leaves some chance of it then coming down.
Households across America who own stocks will be watching Wall Street through their fingers today….
