Tariffed. Global markets went into risk-off mode following President Donald Trump’s Wednesday evening tariff announcements, with losses outsized in the U.S.
The S&P 500 sold off -4.8%, erasing $2.4 trillion of market cap and marking the worst one-day performance since 2022. Sectors with stretched valuations sold off the most, with the tech sector lower by -6.7%, the Magnificent 7 off by -6.7% and the tech-heavy Nasdaq 100 down -5.4%.
International equities didn’t fare much better. In Europe, stocks fell -3.6%, while Chinese (Hang Seng -1.5%) and Japanese (TOPIX -3.1%) equities also declined.
On top of all the equity moves, investors had to digest a decline in U.S. services activity, which points to declining business sentiment even before the tariff announcement.
Investors bought fixed income to hedge growth slowdown risks, and yields across the Treasury curve rallied. The 2-year (3.68%) and 10-year (4.03%) were lower by 18 basis points and 10 basis points, respectively. Futures markets increased their expectations of interest rate cuts this year by a full 25 basis points.
The dollar weakened on growth concerns. The greenback declined -1.8% versus the euro, -1% relative to the Canadian dollar and -1.3% against the Mexican peso.
In commodities, oil ( -6.4%) sold off below $70 per barrel as OPEC+ unexpectedly tripled its planned May oil supply increase. The move, likely influenced by U.S. pressure to lower prices and offset Iranian sanctions, marks a shift in OPEC+’s strategy. Gold ( -0.6%) declined from its all-time high levels amid broad market selling.
This morning, China announced that it will impose a retaliatory 34% tariff on all U.S. imports starting April 10. As of 6:30 am EDT, U.S. equities are extending their losses with S&P 500 futures down -2.3%.
