Stock markets fell sharply and the US stock index dropped by more than 4% on Thursday morning, the 3rd of April, while the US dollar and oil prices also fell as President Donald Trump’s new trade tariffs raised fears of a recession and investors looked for a safe place to invest, reports Reuters.
The 10% baseline import tariff and harsh penalties for many countries worried traders.
Investors fear that trade war could slow the global economy and boost inflation as new US tariffs weigh on the fragile recovery.
THE EURO ROSE MORE THAN 2% AGAINST THE DOLLAR AND THE DOLLAR FELL 2.6% AGAINST THE EURO, THE BIGGEST DAILY DROP IN A DECADE.
The dollar fell by 2.51% against the yen.
The Nasdaq US stock market fell by more than 5%, with technology stocks being the worst hit, with Apple down 8.5% due to Chinese tariffs, Amazon down 7.8%, Microsoft down 2% and Nvidia down 5.1%.
Nigel Green, CEO of global financial consultancy deVere Group, called the tariffs an economic “sabotage”.
Stock markets continued to fall after trillions of dollars had already been wiped from the accounts of the “big seven” tech giants earlier this year amid growing concerns.
The Dow Jones, which covers 30 large US companies, fell by 3.53% to 40 735.53 points, the S&P 500 fell by 4.04% to 5 442.13 points and the Nasdaq Composite fell by 5.20% to 16 685.61 points.
The MSCI World Index of shares fell by 2.83%, to 812.43 points.
The STOXX 600 index of European countries fell by 2.59%.
Investors rushed to buy safe government bonds that provide a guaranteed income, thus reducing US and European bond yields.
Experts warn that if tariffs trigger a recession, central banks may cut interest rates, thus having a positive impact on bond yields.
Fitch called the tariffs a “game changer”, while Deutsche Bank said they could reduce US growth by 1-1.5%. Fitch also downgraded China’s credit rating.
Oil prices fell by more than 6%. US crude oil stood at 66.64 dollars per barrel and Brent at 70.06 dollars per barrel.
Gold reached a record high of over 3 160 US dollars per ounce, but then lost strength while the Japanese yen rose. The spot price of gold fell by 1.23% to 3 094.14 US dollars per ounce.