On Thursday, stocks plummeted as investors sought refuge in bonds, gold, and the yen due to Donald Trump’s unveiling of unexpectedly high tariffs on the world’s largest economy, disrupting trade and supply chains. The technology sector was severely impacted as China and Taiwan faced new tariffs exceeding 30%, totaling 54% on China’s exports to the US. Citi’s global rates trading strategist, Ben Wiltshire, noted that the US effective tariff rate on imports may reach its highest level in over a century.
The Nasdaq futures tumbled by 3.3% while about $760bn was erased from the market value of the “Magnificent Seven” technology leaders during after-hours trade. Apple shares experienced a decline of nearly 7% due to the production of iPhones in China. S&P 500 futures fell by 2.7%, FTSE futures dropped by 1.6%, and European futures declined by nearly 2%.
Gold soared to a record high above $3,160 an ounce, while oil prices declined by over 2% to $73.24 per barrel. Japan’s Nikkei index fell by 2.8% and reached an eight-month low, with nearly every index member decreasing as exporters, banks, insurers, and shippers suffered.
MSCI’s broadest index of Asia-Pacific shares outside Japan decreased by more than 1%. Benchmark 10-year US Treasury yields dropped by 14 basis points to a five-month low of 4.04% as investors anticipated slower US growth. Interest rate futures suggested a higher probability of rate cuts in the near future.
According to Jeanette Gerratty, chief economist at Robertson Stephens in Menlo Park, California, the tariffs were broader and larger than expected. Trump announced a baseline 10% tariff on imports from all countries, with higher rates on certain trading partners, particularly in Asia.
China, Vietnam, South Korea, and the EU faced tariffs ranging from 24% to 46%. Chinese markets experienced declines, with the CSI300 blue-chip index and Shanghai Composite Index dropping by 0.24% and 0.1%, respectively. Hong Kong’s Hang Seng Index fell by 1.6%, while South Korea’s Kospi declined by 2%. The weakening Chinese yuan fell to its lowest level since February 13th, likely impacting China’s giant online retailers.
Zhiwei Zhang, chief economist at Pinpoint Asset Management in Hong Kong, stated that the tariffs pose significant risks to global trade, especially in East Asia. The US dollar rose against currencies in Asia, except for the yen, which experienced an appreciation. Trading partners are expected to retaliate with countermeasures that could lead to substantially higher prices. Analyst Tony Sycamore from IG anticipates increased recession expectations in the US if the tariffs are not promptly negotiated.
Source: https://www.theguardian.com/us-news/2025/apr/03/trump-tariffs-see-stocks-dive-and-investors-scramble-to-bonds-gold-and-yen
