Stock markets plunged Friday as a closely watched US inflation reading heated up amid intensifying concerns over fallout from President Donald Trump’s incoming wave of tariffs.
Shares in automakers fell further as they brace for 25 percent US tariffs due to kick in next week along with a raft of “reciprocal” surcharges tailored to different countries.
The market mood has soured over fears that Trump’s plans will trigger tit-for-tat measures that would rekindle inflation, which could put the brakes on interest rate cuts and spark a recession.
“Investors remain nervous over the economic repercussions from President Trump’s tariff threats, just days before he unleashes his ‘reciprocal tariffs'” on April 2, said David Morrison, senior market analyst at financial services provider Trade Nation.
In Europe, London just about held the line, closing barely off in the week’s final session. But Paris, Frankfurt and Milan all slid around one percent.
On Wall Street, all three major indexes closed sharply lower, with the Dow tumbling 1.7 percent, the S&P 500 losing 2.0 percent and Nasdaq diving 2.7 percent.
The slide came after official data showed the Federal Reserve’s preferred inflation measure, the personal consumption expenditures (PCE) price index, remained unchanged last month at 2.5 percent.
But another key figure, core inflation, which strips out volatile food and energy costs, rose more than expected at 2.8 percent in February on an annual basis, up from the month before.
“The (PCE) report isn’t devastating, but given the current economic uncertainty and market volatility, investors were looking for reassurance in this report — not something to fan the flames,” said Bret Kenwell, US investment analyst at trading platform eToro.
In Europe, automakers Volkswagen, Renault and Stellantis, whose brands include Jeep, Peugeot and Fiat, fared particularly badly. Shares in General Motors and Ford also slumped on Wall Street.
Tokyo’s stock market sank 1.8 percent as the world’s biggest carmaker Toyota fell, along with Honda, Nissan and Mazda.
Seoul was off 1.9 percent as Hyundai gave up 2.6 percent.
Uncertainty over Trump’s plans and long-term intentions has led investors to rush into safe havens such as gold, which hit a new record high of $3,085.96 an ounce on Friday.
Governments around the world have pushed back on Trump’s tariffs, and could announce more countermeasures next week.
On Friday, Canadian Prime Minister Mark Carney told Trump that Ottawa will implement retaliatory tariffs to protect its workers and economy, after Washington announces added trade actions on April 2.