Global markets continued to register heavy losses on Monday (April 7) as tariff-triggered trade tensions increased and investors reacted to hawkish signals from the US Federal Reserve.
The mass market selloff has erased trillions in market value worldwide, with no major region spared.
The S&P 500 (INDEXSP:.INX) fell 2.3 percent, while the Nasdaq Composite (INDEXNASDAQ:.IXIC) dropped 2.8 percent as tech stocks bore the brunt of the selloff, shedding an estimated US$9.5 trillion in value. The Dow Jones Industrial Average (INDEXDJX:.DJI) was down 900 points by midday, wiping out roughly US$900 billion in market capitalization.
Retaliatory tariffs and resource export limitations out of China have rattled investors, as have comments from Fed Chair Jerome Powell that there may be fewer interest rate cuts in 2025.
Before American markets opened on Monday, Asian markets offered a precursor for the day’s activity, with Japan’s Nikkei 225 (INDEXNIKKEI:NI225) plunging 3.1 percent, its worst day in months. Other Asian markets also registered declines as geopolitical tensions and lingering concerns over China’s property sector crisis continued.
Australia’s S&P/ASX 200 (INDEXASX:XJO) ended the day 4.2 percent lower amid the market rout, erasing approximately AU$1.2 billion. The day’s performance was the worst showing for the ASX 200 since May 2020. Mining stocks faced the added pressure of a weakening iron ore prices. The Australian dollar also fell to a five year low, trading below US$0.60.
Last week, Australia decided not to levy retaliatory tariffs against the US. However, Prime Minister Anthony Albanese has denounced the 10 percent tariff on Australian exports saying it was not the “act of a friend.”
Canada’s two main indexes also experienced notable declines, reflecting the broader global market meltdown.
The S&P/TSX Composite Index (INDEXTSI:OSPTX) fell 234.06 points (1.01 percent) at the open, reaching 22,959.41. Similarly, the S&P/TSX Venture Composite Index (INDEXTSI:JX) sank by 460 points, mirroring losses in other major indexes.
Markets brace for further impact
The combined losses across major markets pushed the Nasdaq Composite into bear market territory on Friday (April 4) after the index registered a 20 percent decline.
Concerns that S&P 500 would follow suit mounted on Monday.
CNBC’s Jim Cramer likened the market selloff to “Black Monday,” noting the similarities to the 1987 market crash.
Analysts warn that further volatility is likely if inflation data due later this week exceeds expectations.
Even safe-haven asset gold felt the pressure as it fell below US$3,000 an ounce for the first time since mid-March.
The high-pitched market uncertainty highlights the far-reaching consequences of the sweeping new tariffs and China’s swift retaliation, which together have reignited fears of a global trade war.
With a 10 percent baseline duty on all imports as well as double-digit targeted tariffs, investors are recalibrating their strategies in real time, pulling back from risk and pivoting toward safe-haven assets.
Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.