S&P 500 plunges over 4% as dollar weakens, bonds rally amid global recession fears and trade tariffs impact.
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Bloomberg
*S&P 500 down more than 4 per cent in early trading
*Dollar down against euro, yen
*Safe-haven bonds rally
Stock indexes tumbled, with the S&P 500 down more than 4 per cent in morning New York trading on Thursday, and the U.S. dollar and oil prices also dropping as President Donald Trump’s drastic U.S. trade tariffs stoked fears of a global recession and led investors to seek safe-haven assets like bonds and the yen.
A new baseline 10 per cent tariff on imported goods plus some eye-watering reciprocal tariffs on dozens of countries that Trump said had unfair trade barriers left traders rattled by their severity.
Investors fear a full-blown trade dispute could trigger a sharp global economic slowdown and drive up inflation, with the latest round of U.S. trade tariffs hitting a world economy barely recovered from the post-pandemic inflation surge and dealing with geopolitical strife.
The euro rallied more than 2 per cent against the dollar. Against the Japanese yen, the dollar weakened 2.51 per cent to 145.49.
“This is how you sabotage the world’s economic engine while claiming to supercharge it,” said Nigel Green, CEO of global financial advisory deVere Group.
The Nasdaq was down more than 5 per cent, with technology-related shares among the day’s biggest drags.
Apple fell 8.5 per cent, hit by the tariffs on China – the base for much of its manufacturing. Amazon.com was down 7.8 per cent, Microsoft 2 per cent, and Nvidia 5.1 per cent.
The losses come after trillions off dollars were already wiped off the “Magnificent Seven” tech giants this year as worries have mounted.
The Dow Jones Industrial Average fell 1,489.79 points, or 3.53 per cent, to 40,735.53, the S&P 500 dropped 228.84 points, or 4.04 per cent, to 5,442.13 and the Nasdaq Composite fell 915.44 points, or 5.20 per cent, to 16,685.61.
MSCI’s gauge of stocks across the globe fell 23.68 points, or 2.83 per cent, to 812.43.
RECIPROCAL LEVY
In Europe, the 27-country EU bloc now faces a 20 per cent reciprocal levy. The pan-European STOXX 600 index was down 2.59 per cent.
Trump’s levies impacted Asia particularly hard. China was hit with a 34 per cent reciprocal tariff, Japan 24 per cent, South Korea 25 per cent and Vietnam 46 per cent.
Vietnamese stocks slumped 6.7 per cent in response. The Nikkei 225 index fell 2.8 per cent.
Vietnam’s Prime Minister Pham Minh Chinh pledged to maintain the country’s economic growth target of at least 8 per cent for this year, despite the U.S. imposing its hefty tariff on the Southeast Asian nation’s exports.
The scramble for ultra-safe government bonds that provide a guaranteed income drove down U.S. Treasury yields. The yield on benchmark U.S. 10-year notes fell 17.8 basis points to 4.017 per cent, from 4.195 per cent late on Wednesday.
Euro area government bond yields dropped, with Germany’s 10-year yield, the euro area’s benchmark, down 7.5 bps at 2.65 per cent, after hitting 2.625 per cent, its lowest since March 4.
If the tariffs trigger recessions, central banks around the world are likely to slash interest rates, which benefit bonds.
Credit rating agency Fitch warned they were a “game-changer” for the U.S. and global economy, while Deutsche Bank called them a “once in a lifetime” moment that could knock between 1 per cent-1.5 per cent off U.S. growth this year.
“Many countries will likely end up in a recession,” said Fitch’s head of U.S. economic research, Olu Sonola. “You can throw most forecasts out the door if this tariff rate stays on for an extended period of time.”
Shortly afterwards, Fitch downgraded China’s credit rating, citing the steep U.S. tariffs as a reason.
Oil prices dropped more than 6 per cent, with U.S. crude down 7.07 per cent at $66.64 a barrel and Brent at $70.06 per barrel, down 6.55 per cent on the day.
Gold hit a record high above $3,160 an ounce before running out of steam while Japan’s yen jumped. Spot gold fell 1.23 per cent to $3,094.14 an ounce.
Published on April 3, 2025
