Global Markets: Wall Street and European Exchanges Decline, Uncertainty Prevails

On Wall Street, stock indices slightly fell on Thursday after uncertain trading as a series of recent data points to a slowdown in growth of the U.S. economy, while inflation could rise in the coming months. The Dow Jones index weakened by 0.03 percent to 41,953 points, while the S&P 500 slipped by 0.22 percent to 5,662 points, and the Nasdaq index fell by 0.33 percent to 17,691 points.

Uncertainty prevails on the largest stock exchange in the world, leading indices to balance on the edge of positive and negative territory, ultimately finishing in the negative at the end of trading.

The day before, stock prices rose as leaders of the U.S. central bank maintained their assessment that they would reduce interest rates twice this year by 0.25 percentage points each time. However, these cuts may only occur in the second half of the year as the Fed indicates they have time to wait for data on how the trade war, which Washington is waging on multiple fronts, will affect inflation and economic growth. Fed Chairman Jerome Powell stated that they would not rush into these reductions, allowing time to assess how Trump’s tariffs will impact the economy.

According to Fed estimates, a slowdown in economic growth and rising inflation is expected. Therefore, there are not many reasons to buy stocks, and uncertain trading is anticipated in the coming days.

In Europe, Airline Stock Prices Decline

Stock prices also fell on European exchanges yesterday, and they declined on Friday morning, led by a drop in airline stock prices after a fire at London’s Heathrow Airport halted all flights at one of the busiest ports in the world, while investors are cautious due to rising global trade tensions. IAG shares fell by 3.1 percent, Lufthansa by 1.2 percent, Air France KLM by 2 percent, and easyJet by 1.3 percent.

The pan-European Stoxx 600 index was down 0.5 percent around 9:30 AM, with the most significant declines in the tourism and airline sector, averaging a drop of 2.1 percent. Meanwhile, the Frankfurt DAX was down 0.92 percent at 22,786 points, the London FTSE by 0.58 percent at 8,651 points, and the Paris CAC by 0.76 percent at 8,032 points.

The Stoxx 600 is still up 0.7 percent since the beginning of the week, primarily due to rising stock prices on the Frankfurt Stock Exchange, as the lower house of the German parliament voted to increase spending aimed at reviving growth in the largest European economy and increasing military spending. The upper house is expected to vote on this during the day.

The biggest loser is the stock of the perfume chain Douglas, with a price drop of 18.3 percent after this German perfume and cosmetics retailer reduced its business outlook for the entire year.

Asian Capital Markets Under Pressure Due to U.S. Tariffs

On Asian exchanges, stock prices significantly fell on Friday due to rising concerns about geopolitical tensions and the consequences that U.S. tariffs will have on the global economy, reducing investors’ appetite for risk, who are turning to gold as a safe haven for capital, while the dollar strengthens.

Monetary policymakers around the world are cautious as uncertainty in the global economy and politics rises. The Fed, Bank of Japan, and Bank of England did not change interest rates this week, citing uncertain outlooks primarily due to rising trade tensions initiated by U.S. President Donald Trump.

The MSCI index of Asia-Pacific stocks excluding Japan fell by 0.85 percent on Friday, with most regional exchanges in the red. Only the Japanese Nikkei was up 0.3 percent after the Tokyo Stock Exchange was closed the day before due to a holiday.

At the same time, the Hong Kong stock index weakened by more than 2 percent and is on track for losses for the second consecutive week, as investors became cautious after this index reached its highest level in three years on Tuesday, thanks to growth in the technology sector. Nevertheless, the Hang Seng is still up 18 percent since the beginning of the year, making it the best performer among global exchanges.

Investors will now focus on the details of the tariffs from Trump’s administration that will come into effect on April 2, as markets become increasingly nervous about the impact of tariffs on inflation and economic growth. Ray Sharma-Ong from Aberdeen Investments believes that the main uncertainty revolves around the size of reciprocal tariffs, which could lead capital markets to start factoring in negative risks from the trade war into stock prices again.

The Dollar Rises as the Fed Will Not Rush to Cut Rates

On the foreign exchange markets, the U.S. dollar rose on Friday against the major world currencies, a day after it achieved its best performance in the last three weeks as the Fed indicated it would not rush to cut interest rates.

The dollar index, which measures the performance of the dollar against six major world currencies, rose by 0.21 percent to 104.01 points, in addition to its 0.36 percent increase on Thursday.

This index earlier this week touched its lowest level in five months at 103.19 points after a gradual weakening since January 13, dropping from its highest level since the end of 2022 at 110.17 points. The reason for the dollar’s weakening is investor nervousness about the potential for a global trade war initiated by U.S. President Donald Trump to trigger a recession in the U.S.

The euro exchange rate, which has by far the largest weight in the dollar index, slipped by 0.18 percent to 1.0831 dollars this morning, after weakening by 0.45 percent the day before. The dollar also strengthened by 0.42 percent against the yen, trading at 149.4 yen this morning.

In such conditions, the price of gold is hovering near record levels – on Friday, an ounce on global exchanges was priced at 3,031.5 dollars, just slightly above the record level of 3,055 dollars reached on Thursday.