Global financial markets suffered significant losses on Friday as President Donald Trump’s aggressive tariff announcement triggered a sharp selloff across equities.
The move erased approximately $2.5 trillion from the U.S. stock market and heightened concerns about a potential global economic slowdown.
The MSCI Asia Pacific Index dropped 1.8 percent while Japan’s Topix fell 3.9 percent, its steepest single-day loss in months.
European and U.S. equity futures followed suit with Euro Stoxx 50 futures down 0.5 percent and S&P 500 and Nasdaq 100 futures each falling by 0.3 percent.
The market reaction reflects investor concerns over the potential long-term impact of escalating trade tensions on global economic growth.
President Trump’s announcement is the most tariff action taken by a U.S. administration in nearly a century. While the White House has expressed willingness to reduce tariffs in exchange for favorable terms from trade partners, key global economies including China and members of the European Union have already indicated plans for retaliation.
This development has introduced fresh uncertainty into global markets and raised the risk of further economic disruption.
The yield on the 10-year U.S. Treasury dropped below the key 4 percent level, signaling increased demand for government bonds and safe assets in general. Global high-yield bonds also declined, posting their worst performance since the COVID-19-related market panic in early 2020.
In the currency markets, the dollar continued to weaken. The Bloomberg Dollar Spot Index recorded its fourth straight day of decline with investors shifting into the yen and euro amid rising volatility.
The offshore yuan strengthened slightly while the British pound remained largely stable.
UBS Global Wealth Management downgraded its outlook on U.S. equities and lowered its S&P 500 year-end target by nearly 10 percent.
The firm cited growing risks to corporate earnings and macroeconomic stability, warning that elevated volatility is likely to persist if the tariff regime remains in place.
Investors are now closely monitoring today’s U.S. jobs report and a scheduled address by Federal Reserve Chair Jerome Powell. Both events are expected to influence market expectations around potential monetary policy adjustments.
Market pricing now reflects a 50 percent probability that the Federal Reserve will implement four quarter-point rate cuts before the end of the year.
Economists warn that the new tariffs will likely increase consumer prices, slow down business investment, and reduce overall GDP growth.
Analysts are already revising down their forecasts for the second half of the year, with many indicating that recession risks are rising.
French President Emmanuel Macron urged businesses to delay further investments in the United States while European Union officials signaled plans to target U.S. technology companies in response.
China’s Ministry of Commerce also confirmed plans to introduce countermeasures to protect national interests and mitigate the impact of U.S. policy decisions.
In commodities, oil prices declined sharply after OPEC+ announced a supply increase that exceeded expectations. West Texas Intermediate crude fell 0.9 percent to $66.36 per barrel.
Gold prices remained relatively stable after pulling back from record highs earlier in the week.
Bill Gross, one of the most respected fixed-income investors, warned against reentering the market too soon. He described the situation as a historic shift in global trade policy that could have immediate negative consequences for growth and investor confidence.
While some market strategists believe current declines may present long-term buying opportunities, others remain cautious due to the lack of policy clarity and the potential for further escalation.
The so-called “Trump Put” theory, which suggests the administration could reverse policy if market losses intensify, remains a topic of debate among investors.
As the world’s largest economy enters a period of heightened uncertainty, investors are reevaluating risk exposure and preparing for a prolonged period of volatility driven by geopolitical tensions and shifting monetary expectations.
