New York (AFP) – Global markets slumped Monday, with Wall Street logging sharp losses over fears that US President Donald Trump’s trade policies could tip the world’s biggest economy into a recession. In the United States, the tech-heavy Nasdaq Composite Index plummeted by 4.0 percent, seeing its worst day since 2022 after Trump declined to rule out the risk of a US recession.
“There is a period of transition because what we’re doing is very big — we’re bringing wealth back to America,” Trump told Fox News on Sunday. Since taking office in January, Trump has imposed sweeping tariffs on imports from Canada, Mexico, and China — before allowing a partial rollback for the two US neighbors. A new wave threatens to arrive this week, with steep levies of 25 percent on steel and aluminum imports due to take effect Wednesday.
Responding to the market sell-off Monday, a White House official said there was “a strong divergence between animal spirits of the stock market and what we’re actually seeing unfold from businesses and business leaders.” The official, speaking on condition of anonymity, was referring to the tendency for emotions to drive investor behavior, in contrast to other economic conditions. Yet, uncertainty over Trump’s tariffs and threats have left US financial markets in turmoil and consumers unsure of what the year might bring.
“President Trump seems to have abandoned the US stock market and is willing to put his political vision above the near-term outlook for the US economy,” said Kathleen Brooks, research director at trading platform XTB, in a note. The Nasdaq was bogged down by retreats in the so-called Magnificent Seven tech stocks, which include Google parent Alphabet, Apple, Amazon, Meta, and Nvidia. Stocks in electric carmaker Tesla, led by Trump’s billionaire advisor Elon Musk, closed more than 15 percent down.
While markets were previously bolstered by hopes of tax cuts and lighter regulation, Steve Sosnick of Interactive Brokers noted that sentiment has been bogged down by more immediate worries over tariffs. “Ongoing confusion about tariffs and concerns that maybe the DOGE cuts are excessive led to a drop in consumer sentiment, and are now leading to fears of a slowdown or higher inflation or both,” he said. Sosnick was referring to sweeping cuts to the federal government overseen by Musk and his Department of Government Efficiency (DOGE).
Susannah Streeter, head of money and markets at Hargreaves Lansdown, added: “The prospect of a recession in the US is lurking, with consumer confidence falling, companies facing increasing trade complexity and investors turning more nervous.”
– German spending plan –
The London, Paris, and Frankfurt stock markets all closed lower. The European Union’s trade commissioner Maros Sefcovic complained that “the US administration does not seem to be engaging to make a deal” to avoid tariffs against the 27-nation bloc. Brooks of XTB said investors were also reacting to news that Germany’s chancellor-in-waiting, Friedrich Merz, could face opposition to a massive spending plan that boosted markets last week.
Tokyo earlier finished higher, but Hong Kong and Shanghai stock markets fell after weekend data from China showed that consumer prices fell 0.7 percent in February, the first drop in 13 months. “The data only reinforces what’s been clear for months — deflationary pressures remain firmly entrenched in the world’s second-largest economy,” said Stephen Innes at SPI Asset Management. Beijing’s retaliatory duties on certain US agricultural goods came into force on Monday after Chinese products were hit with additional 20 percent US tariffs.
– Key figures around 2100 GMT –
New York – Dow: DOWN 2.1 percent at 41,911.71 points (close)
New York – S&P 500: DOWN 2.7 percent at 5,614.56 (close)
New York – Nasdaq: DOWN 4.0 percent at 17,468.32 (close)
London – FTSE 100: DOWN 0.9 percent at 8,600.22 (close)
Paris – CAC 40: DOWN 0.9 percent at 8,047.60 (close)
Frankfurt – DAX: DOWN 1.7 percent at 22,620.95 (close)
Tokyo – Nikkei 225: UP 0.4 percent at 37,028.27 (close)
Hong Kong – Hang Seng Index: DOWN 1.9 percent at 23,783.49 (close)
Shanghai – Composite: DOWN 0.2 percent at 3,366.16 (close)
Euro/dollar: DOWN at $1.0836 from $1.0844 on Friday
Pound/dollar: DOWN at $1.2878 from $1.2925
Dollar/yen: DOWN at 147.26 yen from 147.97 yen
Euro/pound: UP at 84.13 pence from 83.87 pence
Brent North Sea Crude: DOWN 1.5 percent at $69.28 per barrel
West Texas Intermediate: DOWN 1.5 percent at $66.03 per barrel
© 2024 AFP
