Stocks Sink to Lowest in Weeks Amid Fears of Global Trade War

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Stock markets across the world sank to their lowest levels in close to four weeks on Friday as threats of sweeping US tariffs unnerved investors and increased fears of a global trade war.

US President Donald Trump said on Thursday that 25% duties on imports from Canada and Mexico would take effect next Tuesday – March 4 – not April 2, as he had suggested a day earlier.

Plus, goods from China would face an additional 10% duty for “insufficient” effort to curb the flow of fentanyl – a threat that drew a sharp response from Beijing. These announcements came days after Trump floated 25% tariffs on shipments from the European Union.

ALSO SEE: China Vows to Hit Back at Trump’s Threat of 20% Tariffs Next Week

Tech stocks slumped after a sell-off in Nvidia and other mega-caps on Wall Street as doubts grew about the chipmaker’s latest earnings report.

Bitcoin also slipped below $80,000 for the first time in over three months, as optimism that the Trump Administration would boost the asset class faded.

“A market that had reduced its sensitivity to recent tariff headlines has had to reconsider that reaction function,” Chris Weston, head of research at Pepperstone, said.

“The skew for risk in the near-term suggests the downside has further to go here.”

Dollar firm, gold & other currencies down

Tariff fears sent risk-sensitive currencies such as the Australian dollar sliding, while the US dollar was set for its best week since late January.

Europe’s STOXX 600 was down 0.6%, after the index fell about 0.5% on Thursday. The sub-index of technology stocks slid 1.4%.

The pan-European index was roughly flat on the week, after rising for nine consecutive weeks.

World stocks were on track for their worst week since mid-December, slumping more than 2%. On Friday, the index fell to its lowest in almost a month.

US stock futures, however, were broadly higher, suggesting Wall Street shares should recover some ground after a selloff the previous day.

A broadly firmer dollar weighed on commodities including gold.

Eyes on US inflation gauge

While the threat of escalating tariffs has spurred dollar strength, it has also stoked worries about its impact on the US economy.

Recent US data has been soft, and traders have reacted by pricing in at least two quarter-point Federal Reserve interest rate cuts this year, with the first as early as July.

Investors will keep a close watch on the Fed’s preferred inflation gauge – the PCE price index – set for release later in the day. Monthly non-farm payrolls figures are due a week from now.

In Asia, Japan’s Nikkei tumbled 2.9%, buckling under the weight of a stronger safe-haven yen, while Hong Kong’s Hang Seng slid 3.3%, and mainland blue chips declined by 1.9%.

Many analysts project that Trump’s trade policies raise the odds of additional stimulus from next week’s meeting of China’s National People’s Congress.

The dollar index – which gauges the greenback against six major peers including the euro, yen and franc – touched 107.45 for the first time since February 13.

The euro languished around its lowest since February 13, after the single currency fell 0.8% on Thursday. It was last trading at around $1.03.

In the euro zone, preliminary data on Friday showed that French inflation dropped below 1% for the first time in four years in February. German and Italian data are released later.

“With the European Central Bank meeting coming next week, it’s interesting to see the inflation numbers,” Jan von Gerich, chief analyst at Nordea, said.

“The market usually moves more to these numbers from the big countries than the final euro area number that we get next week.”

Bitcoin last changed hands 6.3% weaker at $78,984, hovering around its lowest since November 10.

Gold sagged 0.6% to $2,856 per ounce, the lowest since February 10.