Stocks slide as fears grow over tariffs and US economy

Unlock the Editor’s Digest for free

Global stocks fell on Friday, extending a sharp US market sell-off after Donald Trump’s latest threat to impose steep tariffs on imports from major trading partners added to investor concerns about the US economy’s health.

Japan’s exporter-heavy Nikkei 225 index lost 2.9 per cent and South Korea’s Kospi fell 3.4 per cent. Hong Kong’s Hang Seng index fell 3.2 per cent, while mainland China’s CSI 300 benchmark lost 1.6 per cent.

European index futures pointed down, with contracts for the Euro Stoxx 50 falling 1.2 per cent.

The losses in Asia came after the US’s blue-chip S&P 500 lost 1.6 per cent on Thursday, taking its decline since last Wednesday to 4.2 per cent and erasing the market’s year-to-date gains.

The tech-heavy Nasdaq Composite closed down 2.8 per cent, with Nvidia shedding 8.4 per cent even after the chipmaker overnight reported an almost 80 per cent jump in revenue.

“There is mounting concern on several different fronts,” said Tony Sycamore, a market analyst at IG Australia. “There’s concern about . . . what these tariffs will do across the Asia region as a whole.”

The falls came after the US president’s latest barrage of announcements on Chinese, Mexican and Canadian imports.

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.”

Data released in recent days also indicate a sharp drop in US consumer and business sentiment, while a lukewarm response to Nvidia’s earnings left the market vulnerable to bad macroeconomic news, according to investors.

“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.”

“Bears are winning the battle right now,” he added.

After Trump’s election in November, US stocks had climbed on hopes the new administration would enact pro-business economic policies, pushing the S&P 500 to its latest record high as recently as last Wednesday.

But the index has slipped in recent days, as worries about the health of the US economy have mounted.

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.

Asian investors bought US debt on Friday, with yields on two-year and 10-year Treasuries falling 0.031 percentage points and 0.036 percentage points, respectively.

Cryptocurrencies extended declines, with bitcoin falling 5 per cent and ethereum shedding 6.6 per cent. Gold edged down 0.4 per cent.

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.

Read the full article here