Financial storm: Trump's new tariffs roil global markets
World markets are in a frenzy after a surprise blow from Washington: the United States imposed a staggering 104% tariff on Chinese goods. President Donald Trump's decision had an immediate impact on investor sentiment and triggered a wave of instability comparable to the crisis.
US bonds under fire: warning signs of capital flight
The main assets of the global financial system — the US dollar and Treasuries — have taken the brunt of the blow. The massive sell-off in US government securities has caused panic, giving rise to rumors of an exodus of foreign investors from American assets.
Experts warn that if tariff pressure continues, it could trigger an economic slowdown that could force the Federal Reserve to change course, lower rates and sell off its bond reserves.
The dollar is losing ground: investors are looking for salvation in gold and the franc
Amid growing turbulence, even the dollar, traditionally a safe haven during periods of global instability, has begun to lose weight. Capital has moved to more stable assets: gold and the Swiss franc have once again become the focus of investors.
The situation has been aggravated by a rapid fall in commodity prices and a deep decline in emerging markets, which have proven particularly vulnerable in the context of the trade standoff.
Bond Market Cracking at the Seams
The US Treasury market showed a sharp move, with the yield on 10-year bonds jumping 13 basis points in just one day to reach 4.40%. The gains in three days amounted to almost 40 basis points, one of the sharpest changes in the last quarter century.
Analysts were especially concerned about the weak selling of three-year bonds that took place the day before. This result may signal a loss of interest in US government bonds, and therefore the threat of even greater pressure on the market.
Tariff Deadline: Calm After the Storm
The night hours in Washington became the moment of truth: tariffs on Chinese imports in the amount of 104% took effect at exactly 00:01 ET. Despite the drama of the moment, no new trade moves or countermeasures immediately followed. However, the very fact of the tariffs implementation became the trigger for another round of instability in global markets.
Historic collapse: S&P 500 loses trillions
The market reacted quickly and painfully. The S&P 500 index went through one of the sharpest intraday reversals in the last half-century. Initially showing confident growth, it suddenly turned around and ended the session with a 4.2% drop. The result is a stunning loss of capitalization in the amount of $5.8 trillion in just four days. Since the index was created in the 1950s, such a large-scale collapse in such a short period has not been recorded.
VIX on the verge of panic: markets are gripped by fever
The so-called "fear index" VIX, which measures the expected volatility of the stock market, jumped sharply to 60. This is the maximum since August and a direct indicator of growing nervousness among investors seeking protection from instability.
US stock index futures are also not encouraging - on Wednesday they recorded a decline of 0.3%, reinforcing negative expectations for the near future.
Trump: "China is playing with the yuan, but a deal is possible"
Speaking late on Tuesday, Donald Trump accused Beijing of manipulating the national currency. According to him, the depreciation of the yuan is an attempt to neutralize the effect of American tariffs. Nevertheless, the former president expressed confidence that China will eventually return to negotiations and an agreement will still be reached.
JPMorgan Economic Forecast: Recession is not a myth
Meanwhile, JPMorgan analysts assess the situation much more gloomy. In their analytical note, they warn: such a sharp escalation of tariff measures could seriously shake the global economy and lead to a recession.
"Given the volume of imports from China, the current tariffs effectively amount to a tax hit of about $400 billion that would be passed on to U.S. households and businesses," the report says. The experts also note that devaluing the yuan could become a key tool in the Chinese government's arsenal to mitigate the impact of the U.S. trade attack.
Panic in the Air: Investors Flee to Currency Safe Havens
With global trade tensions escalating, investors are once again turning to traditional safe havens. The Japanese yen and Swiss franc have seen increased demand, with the US dollar down 0.9% to 145 yen and 0.5% to 0.843 francs. The flight from the dollar clearly reflects the level of anxiety in financial markets.
Oil in Free Fall: Anxiety Overcomes Geopolitics
Oil prices have come under intense pressure. While global threats usually push prices higher, this time fears of slowing global demand have taken over. Brent has plummeted 4%, falling to $61.30 by the last fix, a 2.4% decline for the session.
Gold sparkles brighter: growth amid global uncertainty
Amid risk aversion, gold has once again taken the lead. The precious metal, which acts as an indicator of fear in the markets, rose by 2% and approached the $3,005 per ounce mark. This is another signal: investors are expecting instability and want to protect capital at any cost.
Europe feels the aftershocks: stock markets are in the red
Wednesday morning session did not bring good news for Europe. Stocks on both sides of the Atlantic tumbled under the weight of increasing trade barriers and worsening economic forecasts. The pan-European STOXX 600 index fell by 2.4%, erasing the gains of the previous day. Germany's DAX, traditionally sensitive to foreign economic conditions, lost 1.7%.
The STOXX 600 is currently about 15.5% below its record close. If the decline reaches 20%, it will officially confirm the onset of a bear market - a period when fear and selling prevail over confidence and growth.
Banking sector weakens: markets await easiness from the ECB
European banks, particularly sensitive to interest rate policy, also came under pressure. The sector index fell by 1.4%, amid rapidly growing expectations that the European Central Bank will be forced to intervene as early as next week.
Traders estimate that the probability of the ECB cutting its key rate by a quarter of a percentage point on Tuesday is estimated at 85%. Such determination of the regulator is perceived as a desperate attempt to keep the economy from sliding into recession.
Counterattack: Trump's tariffs have reached Europe
Donald Trump's trade standoff has gone beyond the conflict with China and has covered Europe with a new wave of tariffs. An additional 20% tariff on a range of goods from the European Union came into force from midnight on Wednesday. The EU's response will not be long in coming - a vote on the counter-sanctions package is scheduled for the evening of the same day.
Pharmaceuticals under fire: giants' shares plummet
The industry, which had been afloat until the last moment, is now also under attack. After Trump confirmed plans to impose a "significant" tariff on all imported medicines to the US, the stock market immediately reacted. Shares of European titans such as Roche, Novartis and Novo Nordisk fell in the range of 5.5% to 5.9%.
The market is sensitive to the prospect of access to the world's largest drug market being limited by high taxes.
Energy and metallurgy: a simultaneous fall
The energy sector also did not escape pressure. The index of European energy companies fell by 3.3%, following a sharp decline in oil prices, which fell to lows not seen since 2021. Demand instability and macroeconomic uncertainty are forcing investors to turn away from risk.
The metals industry suffered even more: mining stocks fell by 4.3%. The reason is the introduction of a record 104% tariff on Chinese metal exports, which play a key role in global production chains.
China: "We will not succumb to pressure"
The Chinese government immediately responded to the US actions. In an official statement, Beijing authorities called Washington's tariff policy "blackmail" and promised to give a "principled and symmetrical response".
The tone of the statements leaves no doubt: geoeconomic tensions will only intensify in the near future.
Germany warns: recession is becoming a reality
The situation has caused concern in Berlin. German Deputy Finance Minister Jorg Kukis said that the economy of the largest country in the Eurozone is on the brink of a new recession. Export industries are already suffering from the effects of the trade confrontation, especially in the auto and metals sectors. "We are seeing clear pressure on our industrial backbone," Kukis said.
Redcare Pharmacy: Falling Amid Debt Maneuver
Amid general turbulence, individual stocks are experiencing localized pressure. Shares of German Redcare Pharmacy have fallen by almost 14% after announcing convertible bonds, an instrument that investors perceived as a sign of an attempt to replenish liquidity in conditions of market instability.
US Bonds Under Sell-Off: Anxiety on All Fronts
Meanwhile, investors continue to get rid of US government bonds. Distrust in the stability of US financial policy against the backdrop of aggressive tariffs and increasing geopolitical tensions makes even such a reliable asset less attractive.
