A trader works on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., February 24, 2025. REUTERS/Brendan McDermid/File Photo
Global Markets Decline Amid Tariff Concerns and Economic Uncertainty
Market Performance
Global equity markets experienced declines on Monday, while safe-haven gold surged to a fresh record high following U.S. President Donald Trump’s announcement that tariffs would be applied broadly to all countries. This development intensified fears of a global trade war and its potential to trigger a recession.
Trump’s comments, made aboard Air Force One, dampened expectations that the levies would target only select nations with significant trade imbalances. On Wall Street, the three major indexes fell, with consumer discretionary, technology, and communication services stocks leading the decline. However, sectors such as energy, consumer staples, utilities, and real estate recorded gains.
George Lagarias, chief economist at Forvis Mazars, highlighted market concerns: “What the Trump administration has shown us so far is that you should not expect a consistent approach. This is what scares the market the most. Inconsistency breeds uncertainty, and markets hate uncertainty.”
- Dow Jones Industrial Average (.DJI) declined 0.11% to 41,538.47.
- S&P 500 (.SPX) dropped 0.90% to 5,530.99.
- Nasdaq Composite (.IXIC) fell 2.00% to 16,976.48.
European markets also suffered losses, with the STOXX 600 (.STOXX) falling 1.40% to its lowest level in nearly eight weeks. Key indexes in Frankfurt (.GDAXI), London (.FTSE), and Paris (.FCHI) declined between 1.7% and 2%. In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) dropped 1.9%.
Economic Outlook and Recession Fears
Goldman Sachs analysts raised their probability of a U.S. recession from 20% to 35%, forecasting that Trump could announce reciprocal tariffs averaging 15% across all U.S. trading partners by April 2.
Recent economic data highlighted concerns, as a key measure of core inflation rose more than expected in February, while consumer spending figures disappointed. This has increased the significance of the March payrolls report, due on Friday, where a figure below the expected 140,000 job gains could heighten recession fears.
Talley Leger, chief market strategist at The Wealth Consulting Group, commented on investor concerns: “The current market narratives center on this fear of stagflation, which conceptually could be the worst possible combination for stocks. In a slowing growth environment, earnings would decelerate or even collapse in a recession, while spiraling inflation would squeeze stocks on the valuation channel.”
Commodities and Currency Movements
Gold extended its record-breaking rally:
- Spot gold rose 1.18% to $3,120.27 per ounce.
- U.S. gold futures increased 1.3% to $3,126.60 per ounce.
In the currency markets, the U.S. dollar weakened against the Japanese yen but strengthened against the euro amid trade uncertainties:
- USD/JPY fell 0.13% to 149.63.
- EUR/USD declined 0.27% to $1.0799.
- USD/CHF rose 0.48% to 0.885.
The U.S. dollar index, which measures the greenback against a basket of major currencies, increased 0.22%.
Bond Market and Interest Rate Outlook
Bond markets reflected expectations that economic growth concerns would outweigh temporary inflationary pressures, prompting the Federal Reserve to cut interest rates by approximately 80 basis points this year.
- U.S. 10-year Treasury yield fell 3.5 basis points to 4.219%.
- German 10-year Bund yield declined 2.6 basis points to 2.706%.
Market participants await further clarity on the interest rate outlook when Federal Reserve Chair Jerome Powell delivers remarks on Friday, following speeches from several other Fed officials throughout the week.
Oil Market Reaction
Oil prices saw gains amid Trump’s warning of potential secondary tariffs on buyers of Russian oil should he perceive Moscow as obstructing efforts to end the Ukraine conflict.
- Brent crude rose 1.41% to $74.67 per barrel.
- U.S. crude (WTI) increased 2.34% to $70.99 per barrel.
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