An big “bloodbath” is underway, for the second day in a row, on the stock markets of Europe, and in the US, following Donald Trump‘s imposition of retaliatory tariffs on 184 countries and the EU, and China’s decision to respond with additional 34% tariffs on US products – starting April 10.
In the US, a new massive sell-off is “sweeping” the markets, bringing to the fore strong concerns about the outlook for the global economy, despite positive data from the US labour market. In today’s Wall Street session, the Dow Jones loses 3.59%, or more than 1,450 points, to trade at 39,080. The S&P 500 “dips” 4.14% to 5,173 points and the Nasdaq slides rapidly to 4.09% and 15,873 points.
The pressure is also pervasive on a weekly basis, with the Nasdaq leading the losses, falling 4.5% as the tariff plan forced investors to limit their exposure to high-risk stocks. The S&P 500 is down 3.3% and the Dow Jones 2.5% so far this week. Both the Nasdaq and the S&P 500 are headed for their worst weekly performances since September 2024, recording their sixth down week in the last seven.
Indeed, it is telling that if this decline in the Nasdaq continues until the end of today’s session, then the index will enter a bear market. This is because with a drop of more than 4.5%, its losses from its December high are well over 21%.
Apple, which tumbled 9.3% yesterday, marking its biggest drop since March 2020 and losing $310 billion of its value, retreated a further 4% on Friday. Shares of Micron Technology and Microchip Technology posted losses of more than 16% and are down about 10% on Friday, and Amazon lost more than 12% over the weekend, causing its market value to fall below the $2 trillion mark. Broadcom sank 11% yesterday and is losing another 7% today, while rising star Nvidia fell 7.8% yesterday and another 6.50% today.
Semiconductor makers are under the most pressure after China announced retaliatory measures.
The prospect of a trade war is a disastrous scenario for companies such as Apple, Nvidia and Broadcom, which depend on Asia for components and assembly of their products. The complex supply chains that have grown over decades cannot be replaced quickly, forcing companies to either pass costs on to consumers or see their profit margins evaporate.
Bank stocks are also falling as concerns grow about a slowdown in the U.S. economy. Morgan Stanley is down 6% and Goldman Sachs is down 5.7%. Citigroup and JPMorgan Chase slip 8% and 6%, respectively, while Wells Fargo loses 5%.
The VIX volatility index, also known as the fear index, topped the 40 level, bringing back memories of past crises such as the pandemic and the banking turmoil of 2023.
At the same time, bond markets rallied, with the 10-year yield falling 14 basis points below the psychological 4% level to 3.89%. Fears of a recession are intensifying, while indexes measuring credit risk rose the most since the 2023 banking crisis.
“Mayhem” on European stock markets
European stock markets closed even lower today.
The pan-European Stoxx 600 index, which is an average for European bourses, closed down 5%, posting its worst weekly loss of the year due to the US tariff announcements on Wednesday, falling 8.3% compared to the previous week.
In Europe, the FTSE 100 index on the London Stock Exchange fell nearly 5%, Germany’s DAX 30 in Frankfurt lost 4.7% or 1,100 points and on the Paris capital market the CAC 40 slipped 4.3%. Milan’s stock exchange tumbled 6.53%, while the IBEX 35 in Madrid fell 5.77%. Banks lost 8.5% after falling 5.53% on Thursday. The sector is considered vulnerable to a slowdown in growth or a recession, which is now considered a very strong possibility for both the U.S. and the global economy.
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