On Wall Street, $2.4 trillion wiped out yesterday due to tariffs

After Washington announced the introduction of drastic tariffs, all major global stock exchanges sharply declined on Thursday, with approximately $2.4 trillion, or 2.4 trillion in market value of companies within the S&P 500 index, wiped out on Wall Street alone.

Since U.S. President Donald Trump announced a 10 percent tariff on all imports on Wednesday evening, as well as additional reciprocal tariffs on imports from countries with which the U.S. has the largest trade deficit, panic has spread across global stock markets. This could trigger an escalation of the trade war, disruptions in supply chains and international trade, rising inflation, and a slowdown in the growth of the world’s largest economies, potentially leading to recession in some of them.

Asian stock exchanges were the first to be hit on Thursday as Trump announced drastic reciprocal tariffs on imports from China, Japan, India, Taiwan, South Korea… For imports from China, which are already subject to a 20 percent tariff, an additional tariff of 34 percent will now apply, while imports from Japan will face a 24 percent tariff, from India 26 percent, and from South Korea 25 percent… As a result, stock prices fell across all Asian exchanges on Thursday, with the largest declines in Japan, South Korea, and Hong Kong.

EU announced countermeasures

European exchanges followed, where indices were in deep negative territory from the moment they opened, as Trump announced additional tariffs of 20 percent on imports from the European Union, prompting many European leaders to respond sharply and announce countermeasures.

At the end of trading, the London FTSE index was down 1.55 percent, at 8,474 points, while the Frankfurt DAX plummeted 3.01 percent, to 21,717 points, and the Paris CAC fell 3.31 percent, to 7,598 points.

On Friday morning, stock prices on European exchanges continued to decline as investor fears of an escalating trade war and recession risks kept the markets unsettled.

When the new tariffs come into effect, analysts estimate that the effective tariff rate will reach 22 percent, which has not been seen since 1910.

– If tariffs remain at these levels, a recession is very likely in some economies in the second or third quarter. In that case, ‘bears’ would dominate the capital markets simultaneously – says David Bahnsen, director at Bahnsen Group.

On Wall Street, the largest drop since the COVID crisis

And at the end of the day, Wall Street was also hit hard. The Dow Jones index fell by 3.98 percent, to 40,545 points, while the S&P 500 plummeted 4.84 percent, to 5,396 points, and the Nasdaq index dropped 5.97 percent, to 16,550 points. For all three indices, this is the largest daily drop since 2020, when panic reigned in the markets due to the COVID crisis. This resulted in approximately $2.4 trillion in market value of companies within the S&P 500 index being wiped out yesterday. Among the biggest losers were the stocks of several technology giants. Apple’s price fell by 9.2 percent, Amazon’s by 9, and Nvidia’s by almost 8 percent.

Trump’s tariffs are higher than expected, prompting analysts to work urgently on new assessments of the impact on the U.S. and global economy. Many questions remain open, including how the largest countries in the world will react. China and the European Union have announced countermeasures. South Korea, Mexico, India, and several other countries have stated that they will refrain for now and try to negotiate.

– There are still far more questions than answers in the market – says Steven DeSanctis, strategist at Jefferies Financial Group.

VIX ‘fear’ index surged

While all major indices on Wall Street fell yesterday, the only one that rose was the VIX ‘fear’ index, which broke above the 30-point level for the first time since August. This indicates that investors are increasingly hedging their portfolios against a potential further decline in stock prices.

Trump stated on Thursday that he is open to negotiations.

– The Trump administration may be playing a ‘chicken game’ with trading partners, seeing who will back down first, but investors are not willing to wait for results. They will sell first and then ask questions – says Michael Arone, strategist at State Street Global Advisors.

Therefore, uncertain trading is expected on global exchanges in the coming days.

Dollar under pressure, oil prices fall further

On the currency markets, the value of the dollar against a basket of currencies has fallen to its lowest level in six months.

The dollar index, which shows the value of the U.S. dollar against the other six major world currencies, is around 101.70 points this morning, down from 103.13 points at the same time yesterday. The dollar’s exchange rate against the Japanese currency fell from yesterday’s 147.25 to 145.90 yen. The U.S. currency also weakened against the euro, with the euro reaching 1.1060 dollars, compared to 1.0915 dollars at the same time yesterday.

Oil prices have fallen for the second consecutive day as traders fear a slowdown in economic growth, and thus demand for ‘black gold’. The price of a barrel on the London market fell by 0.84 percent to $69.55, while on the U.S. market, a barrel decreased by 0.91 percent to $66.35.