The announcement of the introduction of prohibitive and universal import duties on Thursday frightened investors from Wall Street. S&PC and NASDAQ have made the deepest declines in almost 5 years. There was fear of recession and increased inflation.
It was a terrible session for owners of action. The S & P500 index, after a drop in 4.84%, retreated to level 5 396.52 points. – The lowest since August last year. Therefore, all post -election increases were erased when investors were enthusiastic about the news of Donald Trump as president of the United States. For the American stock market it was the worst day since 2020.
Nasdaq Coposite, after losing almost 6%, landed at an altitude of 16,550.61 points. And he was also the lowest since last year's August. After losing almost 4%, Dow Jones checked in with a result of 40,545.93 points.
The technology sector soaked in the previous two years succumbed to a powerful discount. Apple's shares went down by 9.25%, the finish line by almost 9%, while Nvidia by almost 8%. The Broadcom rate dropped by over 10%, Amazon by almost 9%, and Palantiru by 4.4%. Microsoft's quotations completed withdrawal by 2.4%, which in these circumstances looks almost like an increase.
Investors are afraid that global technological concerns from America will become the target of retaliation from European and Asian rule, which may severely tax them in response to American import duties. After the end of the Wednesday session, President Trump announced the introduction of horrendously high duties practically for the entire import to the USA from outside the Nafta zone (Mexico and Canada have already been covered by the target). We are talking about rates starting from 10%, and in some cases reaching high 25-30%. In the case of China, it is to be up to 54%in total, which de facto is a declaration of an open trade war.
– I think he is going very well. It was a surgery, such as patient surgery, and this is a great deal. (…) We have six or seven trillions of dollars coming to our country and we have never seen such a thing. The markets will survive the boom, the actions will survive the boom, the country will survive the boom – said President Trump, asked on the way to the Marine One helicopter about the assessment of the reaction to the introduced duties.
There was a fear of Wall Street that such high duties would cause a proportional response of the authorities in Asia and Europe and lead to a breakdown in international trade, and consequently to a deep recession also in the United States. Even worse, it can be a recession combined with an increase in price inflation, because producers will be forced to shift a significant part of the duties (actually tax on consumption) to final consumers.
These fears seemed to be confirmed by the March Read ISM index for the service sector, which recorded a very unexpected decrease from 53.5 points. up to 50.8 points. The market consensus assumed recreation only up to 53 points. In particular, the powerful recourse (from 53.9 points to 46.2 points) is worried about the subineddex measuring employment. The wave of mass layoffs (in the order of 275.2 thousand) was also shown by the Challenger's March report. These data look clearly recessive.
Despite this, the shares of strictly consumer companies were included in the price and constituted the islands of greenery in the Red Stock Exchange Sea. For example, Coca-Cola's quotations went up by 2.6%, and Procter & Gamble by 1.7%. The values of telecommunications and related to the health care industry were also in the plus. So generally they were defensive sectors, relatively resistant to economic recession.
Interestingly, the declines at Wall Street were deeper than in Europe or Asia. In the Far East, Nikkei225 lost “only” 2.8%. The German DAX dropped by 3%, French CAC40 by 3.3%, and Milan MIB by 3.6%. The dollar lost dramatically to the euro – the EUR/USD exchange rate went up by 1.5%, exceeding 1.10. Initially, it also gained gold, whose dollar prices reached a new record of all time. But finally, the royal metal made up by as much as 2%, inscribed in a wide and deep discount on raw material markets, where oil went down by over 5%, copper by 3.5%, and silver by over 9%.
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