Stocks dive in early trading as investors seek safer assets following US tariffs
Tokyo's Nikkei fell to 3%, reflecting eight-month lows, which led heavy losses across Asia.(Chinatopix Via AP)
Stocks dived on Thursday morning as investors scrambled for the safety of bonds, gold and the yen, fearing new tariffs from US President Donald trump have intensified a trade war which could threaten a world recession.
European stocks slumped following the announcement, with the Stoxx Europe 600 Index falling by 1.4% in Paris, with regional bourses all trading heavily in negative territory.
Switzerland’s SMI Index underperformed, dropping by 1.8% after the US imposed a 31% levy on the country. Meanwhile, Denmark’s OMXC25 Index dropped as much as 3.4% and was set to enter a bear market.
European banks, which led the rally this year, were among the hardest hit, losing as much as 3.8%, while industrial shares, which count among them big exporters to the US, also fell.
The dollar was swept to a six-month low, falling along with US bond yields after Trump imposed tariffs that raise effective import taxes to the highest levels in a century.
Nasdaq futures dropped 3.2%, while European futures were down nearly 2%. Meanwhile, Tokyo's Nikkei fell by 3%, reflecting eight-month lows, which led heavy losses across Asia.
Apple's market capitalisation fell by more than $240bn (€219bn) as its shares slid by 7% in after-hours trade, while Nvidia's market cap dropped by 5.6%.
Mr Trump's new tariffs have also helped gold reach a record high, rising to $3,160 an ounce following weeks of heightened demand, while Japan's yen jumped by more than 1% as foreign exchange traders looked for safety outside the US dollar.
“The contrast between winners and losers is clear in the FX market, where most Asian currencies, particularly the likes of Thai baht, Chinese yuan and the Malaysian ringgit, have sold off against their peers," said Roman Ziruk, Senior Market Analyst at global financial services firm Ebury.
"There is a notable exception – the Japanese yen."
“Despite a reciprocal tariff of 24% imposed on Japan, the yen is emerging as a safe haven of choice at a time of heightened global trade uncertainty and rising economic concerns," Mr Ziruk added.
Wednesday evening saw the US President slap 20% tariffs on all imports from the EU as part of a series of measures which will hit Irish exports. However, pharmaceuticals, a key export for Ireland, will not be included in this for now.
Other country-specific tariffs included 34% on China, 46% on Vietnam, 10% on Britain and 31% on Switzerland that will come into force on April 9.
A 25% tariff on imported cars and vehicles also came into force at midnight.
Speaking early on Thursday morning, European Commission President Ursula von der Leyen warned that Europe is prepared for further retaliation if necessary, announcing that the EU is finalising its first package of countermeasures against the US.
“We are prepared to respond," Ms von der Leyen said.
“We are already finalising the first package of countermeasures in response to tariffs on steel and we’re now preparing for further countermeasures to protect our interests and our businesses if negotiations fail."
Additional reporting from Reuters.
