Quick Overview: What’s Happening?
- Trade War Escalation: The U.S. and China are slapping tariffs on each other’s goods like there’s no tomorrow.
- Market Swings: Global shares are feeling the heat, with some markets dropping and others trying to hold steady.
- Bond Market Jitters: Treasury yields are jumping as investors react to the uncertainty.
- China’s Response: China is not backing down and is seeking alliances to counter the U.S.’s moves.
The Rollercoaster Begins: Global Shares in Turmoil
Global shares started tripping over their own feet recently as the U.S. and China decided to crank up their trade war. Japan and some European markets took a tumble, while others are trying their best to stand tall.
The future for the S&P 500 managed to crawl up a bit, around 0.7%, and the Dow Jones Industrial Average wasn’t far behind, inching up about 0.4%. But the worry is still thick in the air, thanks to President Trump’s trade tactics.
Tokyo Takes a Dive (Then Climbs Back a Bit)
Tokyo’s benchmark had a really bad morning, initially plummeting more than 5%. It managed to pull itself together a little, but still closed 3% lower at 33,585.58. Ouch!
China’s Counterpunch: Tariffs Go Up!
Just when you thought things couldn’t get any more interesting, China announced it was boosting its tariffs on U.S. exports to a whopping 125%! They’re trying to match the U.S. tariff levels, not including that 20% from a few weeks back.
A Finance Ministry spokesman didn’t hold back, saying the U.S. is playing a meaningless numbers game with these tariffs that has no economic sense and will become a global laughing stock. The spokesman added if the U.S. keeps infringing on China’s interests, China will fight to the end.
Bond Market Blues: Yields on the Rise
Early Friday, the 10-year Treasury yield was sitting at 4.40%. All this market drama has hit the bond market hard, with Treasury yields jumping as bond prices take a nosedive.
Flashback: When the Bond Market Had Its Say
Remember when the bond market helped send Liz Truss packing in the UK back in 2022? Her economic policies didn’t sit well with investors, and she became Britain’s shortest-serving prime minister.
Trump’s Tariff Time-Out: A 90-Day Delay
President Trump announced a 90-day delay in implementing his higher tariffs, mentioning that the bond market was getting a bit “queasy.” The 10-year Treasury yield shot up to nearly 4.50% Wednesday morning from just 4.01% at the end of last week. It calmed down somewhat following Trump’s U-turn Wednesday on tariffs, dropping all the way back to 4.30% shortly after the release of a better-than-expected report on inflation Thursday morning.
Europe’s Mixed Bag: Some Gain, Some Lose
In early European trading, Germany’s DAX shed 1% to 20,353.16, while the CAC 40 in Paris lost 0.4% to 7,100.90. Britain’s FTSE 100 gained 0.5% as the government reported the economy, the world’s sixth largest, enjoyed a growth spurt in February, the month before U.S. President Donald Trump started to roll out tariffs on imported goods. It expanded 0.5% in February, ahead of market expectations for a more modest increase of 0.2%.
Asia’s Tale: Rallies and Retreats
South Korea’s Kospi fell 0.5% to 2,432.72, while in Australia, the S&P/ASX 200 shed 0.8% to 7,646.50. China markets rallied after Chinese President Xi Jinping met with Spanish Prime Minister Pedro Sánchez and Beijing announced plans for Xi to visit Vietnam, Malaysia and Cambodia.
The world’s second-largest economy is also ramping up its own countermeasures to Trump’s tariffs. Hong Kong’s Hang Seng picked up 1.1% to 20,914.69 and the Shanghai Composite index climbed 0.5% to 3,238.23. Taiwan’s Taiex gained 2.8% as investors anticipated that orders for the island’s high-tech products will surge as trade between the U.S. and the Chinese mainland dwindles.
Wall Street’s Wild Ride: Up, Down, and All Around
On Thursday, the S&P 500 tumbled 3.5%, slicing into Wednesday’s surge of 9.5% following Trump’s decision to pause many of his tariffs worldwide. The Dow Jones Industrial Average dropped 2.5% and the Nasdaq composite tumbled 4.3%.
Experts Weigh In: Is This a Real Pivot or Just a Ploy?
Investors are wondering if Trump’s decision to delay higher tariffs is a genuine change of heart or just a clever trick. Stephen Innes of SPI Asset Management thinks it’s more of the latter.
“That’s the market hitting the brakes, hard. The sugar high from Trump’s tariff pause is fading fast,” he wrote.
White House Clarification: Tariffs at 145%!
Losses for U.S. stocks accelerated after the White House clarified that the United States will tax Chinese imports at 145%, not the 125% rate that Trump had mentioned. The drop for the S&P 500 exceeded 6% at one point.
Oil and Currency Markets: A Quick Look
In other news, U.S. benchmark crude oil added 47 cents to $60.54 per barrel in electronic trading on the New York Stock Exchange. Brent crude, the international standard, added 40 cents to $64.73 per barrel.
One dollar bought 142.58 Japanese yen, down from about 145 yen a day earlier. The euro rose to $1.1380 from $1.1200.
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