The above statement, issued by president Trump late on Sunday night, will do little to ease the widespread panic currently enveloping both US and international markets. Suffice to say the new tariff regime turned out to be harsher than most analysts were predicting. Some parts of the world emerged from the wreck with better deals than others, but no country escaped unscathed.
Trillions of Dollars were wiped from US stock markets last week as investors sought refuge away from the carnage. Following Thursday’s losses, the Dow fell a further 5.5% on Friday, as did the Nasdaq Composite and S&P 500, which plummeted 5.8% and 6% respectively. By no means has the damage been contained to the US however. International markets are reeling from the new tariffs and stock markets far and wide are currently undergoing drastic selloffs. Asian markets saw heavy selling pressure from the get go this morning, prompting a 7% loss in Japan’s Nikkei 225 index. In Hong Kong, the Hang Seng Index opened with a massive 9% gap down and is now pushing even lower. Europe was hit hard on Friday, with the FTSE 100 and German DAX both closing down 5% on the day. One can only guess what will happen once European and American markets wake up later today.
The selloff in stocks has forced many parties to cover losses by closing long positions in precious metals, causing a sizeable drop in bullion prices. Gold fell down to $3,037 an ounce by Friday and dipped all the way down to $2,970 early this morning. Fundamentally, the case for gold and other safe-haven assets has not changed, but the chaos is such that some degree of rebalancing is in order.
Given all the commotion revolving around tariffs, one could be forgiven for missing last Friday’s NFP report. In a surprising twist, the latest employment figures far exceeded expectations, coming in at 228k new jobs in March compared to predictions of just 135k. The report bolstered the Dollar, which despite the initial tariff-induced shock has been relatively resilient over the past couple of sessions. The DXY is currently hovering around the 103 mark but this fails to tell the full picture. Safe-haven currencies such as the Swiss Franc and Japanese Yen have benefitted greatly from the turmoil, seeing strong inflows since last week’s announcement. The Australian Dollar on the other hand crashed through the floor last Friday, reaching lows of just $0.60.
Oil prices have been absolutely smashed by recent events. Brent Crude is now looking at just $64 a barrel while WTI is barely hanging on to $60 as of this morning. Crypto markets were initially unfazed by current affairs, but the pervading negative sentiment finally appears to have caught up. Bitcoin decisively lost $80k yesterday and is showing very little willingness to try to reclaim it. It is difficult to speculate on the longer lasting implications of the ongoing trade situation and tensions are obviously high. Now more than ever, it is essential to avoid getting carried away by headlines.
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