📆 Friday, April 4
► European equities extended their losses on Friday, with the Stoxx 600 index falling by around 4% (!) to hit its lowest level since early January. Major indices across the region are deep in negative territory, including London's FTSE 100, currently down 3.9%, and Germany's DAX, which is down 4.8%. France's CAC 40 is down 4.1%, despite industrial production rising 0.7% month-on-month in February. The weakness is broad-based and is being driven by fears of further tit-for-tat tariffs (e.g from the EU, following China's tit-for-tat tariffs on the US) after Trump's imposition of a 10+20% tariff on EU imports to the US. Economic data showed the German construction purchasing managers' index falling to 40.3, while factory orders were flat. Bond yields across the region plunged, with the 10-year yield in Germany falling 13 basis points to 2.51% and the 10-year yield in the UK falling 11 basis points to 4.42%.
► US equities continued their sharp decline, with S&P 500 futures falling 3% in early trading (Nasdaq 100 -3.1%), after the market value had already been wiped off by $2.5 trillion yesterday. The crash intensified dramatically after China's Ministry of Commerce announced that the country would impose a 34% levy on all US products. This is mirrors the tariff on Chinese goods imported into the US – which were announced by Trump on Wednesday. The 10-year US Treasury yield plunged further – down 15 basis points to 3.90% (well below the key interest rate of 4%) – due to a flight to safety (especially bonds). As mentioned yesterday, the next factor that will lead to excessive losses is the countermeasures. The number of non-farm employees (NFP) in the US should have risen by 140,000 in March, which is a slight slowdown compared to February and could further weigh on market sentiment. Trump's tariffs, including a 25% tariff on car imports, are likely to slow the US economy and drive up inflation. Economists warned of a possible recession if the tariffs remain in place.
► Asian equities ended the week well in the red, due to Trump's aggressive tariffs and rising recession fears. Japan's Nikkei 225 fell 2.8% to hit the lowest close in eight months. China's Shanghai Composite was closed for a public holiday, but offshore CNY rose to 7.25/USD. Australia's ASX 200 plunged 2.44% to hit the lowest close in almost eight months. South Korea's KOSPI Index fell 0.86% to 2,465.42 after President Yoon Suk Yeol was deposed following the Constitutional Court's confirmation of his impeachment. These losses are during regular trading hours – with heavy losses in after-hours trading after China announced retaliatory tariffs against Trump's tariffs.
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