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Global stocks fell on Friday, extending a sharp sell-off on Wall Street, after Donald Trump’s latest threat to impose tariffs on America’s biggest trading sparked fears over the potential damage to the world economy.
The broad Stoxx Europe 600 dropped 0.6 per cent in early trading, led by a 0.9 per cent fall in Germany’s exporter-heavy Dax and a 0.6 per cent decline in France’s benchmark Cac 40 index.
Markets fell across Asia, with Japan’s Nikkei 225 index losing 2.9 per cent, South Korea’s Kospi sliding 3.4 per cent and Hong Kong’s Hang Seng index tumbling almost 6 per cent. Mainland China’s CSI 300 benchmark lost 4 per cent.
The steep declines followed a bruising day on Wall Street as investors were blindsided by the latest trade salvo from Trump, who said he would impose an additional 10 per cent tariff on Chinese imports and press ahead with levies on Canada and Mexico from March 4.
“The last days have been painful to a number of investors . . . Trump’s tariff announcement has rattled the already fragile market,” said Mohit Kumar, an analyst at Jefferies.
Despite a barrage of threats since taking office last month, Trump has only imposed a 10 per cent tariff on Chinese imports, but there are signs that the spectre of a trade war has dented consumer confidence in the US, the world’s largest economy.
Confidence this month fell by the most since August 2021, according to a Conference Board Consumer Confidence Index released this week.
The weakness in Asia and Europe came after big tech stocks led declines on Wall Street on Thursday, when the Nasdaq closed down 2.8 per cent and the S&P 500 finished 1.6 per cent lower, wiping out its gains for the year.
Chipmaker Nvidia, the biggest winner from investor enthusiasm for artificial intelligence over the past two years, fell 8.4 per cent after its fourth-quarter earnings beat analysts’ forecasts but still failed to ignite a wider rally.
Nvidia is no longer the electrifying force it was for US stocks for much of the past two years, when its blowout quarterly results often powered the wider market higher.
“Nvidia didn’t save the world,” said Mike Zigmont, co-head of trading at Visdom Investment Group. “The results were great but not so mind-blowingly great that everyone wants to buy more stocks.”
Trump’s election victory in November powered US stocks higher on hopes the new administration would enact pro-business economic policies, but the S&P 500 has slipped in recent days as focus has instead turned to the potential threats to the US economy.
“Bears are winning the battle right now,” said Zigmont.
Retail investors, who have so often stepped in to buy stocks whenever the market dips, are suddenly gripped by “unease”, according to VandaTrack, a data company that monitors retail trading flows.
The retreat from riskier assets has hit cryptocurrencies hard in recent days. On Friday, bitcoin fell 5 per cent and ethereum shed 6.6 per cent.
China and the US “don’t seem to be at that stage yet where either side is serious about making a deal”, said Julian Evans-Pritchard, head of China economics at Capital Economics. “This is probably not the last tariff hike.”
The dollar rose 0.8 per cent against a basket of trading partners’ currencies on Thursday but moderated gains on Friday, adding a further 0.1 per cent.
Fears of an impending economic slowdown look overblown to some market participants, however.
After a strong end to 2024, weak consumer sentiment data released over the past week has given “over-extended markets the opportunity to correct”, said Steven Blitz, chief US economist at TS Lombard.
“The Trump recession? Not so fast,” he added.
