Financial markets face significant declines as Wall Street braces for major losses on Monday, following a tumultuous week driven by fears of slowing global economic growth due to new US tariffs announced by President Donald Trump. Oil prices also fell sharply, dropping below $US60 ($98) a barrel, reflecting investor anxiety over a potential trade war’s impact on the economy.
Futures for the S&P 500 saw a steep drop of 2.7% in premarket trading, with the Dow Jones down 2.4% and Nasdaq futures declining by 3%. Last week, the S&P 500 already showed signs of vulnerability, dipping 17.4% below its peak and heading into bear market territory. The sharp losses were mainly triggered by Trump’s announcement of higher import taxes, which prompted retaliatory moves from China.
Critics, including economists and business leaders, have long opposed Trump’s tariff strategies, which they argue could hinder growth and lead to increased inflation. JPMorgan CEO Jamie Dimon expressed concerns in his letter to shareholders, noting that while tariffs might not directly cause a recession, they would undoubtedly dampen economic growth prospects.
Asian markets witnessed heavy losses, with Tokyo’s Nikkei 225 index plunging 7.8% and European indices, such as Germany’s DAX, falling over 10% at the open. Concerns are mounting over how ongoing tariffs may disrupt global trade and supply chains, prompting a wave of selling across risk assets.
Late Sunday, Trump reaffirmed his tariff stance, indicating he was unconcerned about the market’s negative reactions. The abrupt sell-off continued unabated even after a positive report on the US job market failed to halt the decline in stock prices, highlighting the intense uncertainty overshadowing future tariff implications.
Analysts are cautious, viewing a prolonged period of market volatility as probable. There’s speculation that further retaliatory tariffs from other countries could ensue, exacerbating global economic risks. Commodity prices, including crude oil, have already responded negatively, with fears of reduced demand stemming from economic slowdowns driven by these tariffs.
As the situation develops, investor sentiment remains severely shaken, and significant uncertainties loom about the global economic landscape as countries react to the evolving trade dynamics. The key remains to see how long these tariffs remain in effect and the extent to which negotiations will yield contradictions or mitigative outcomes.