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Market Commentary - Foreign Markets

Wall Street suffers a massive sell-off amid U.S.-China tariff tensions; semiconductor, energy and gold stocks lead declines as global markets follow suit.

Global Markets Tumble as China Retaliates with Tariffs, Fueling Fears of a Trade War

07-Apr-2025, 10:16
The S&P 500 plummeted 322.44 points (6%) to 5,074.08, the Nasdaq dove 962.82 points (5.8%) to 15,587.79 and the Dow tumbled 2,231.07 points (5.5%) to 38,314.86. The extended nosedive on Wall Street came amid ongoing concerns about a global trade war after China announced retaliatory tariffs on U.S. goods in reaction to President Donald Trump's new levies.

China's finance ministry announced a 34% tariff on all U.S. imports starting April 10, matching Trump's planned reciprocal tariff, raising China's total effective rate to 54% with existing duties. Calling Trump's move unilateral and bullying, China urged the U.S. to resolve trade issues through mutual consultation. Trump responded on Truth Social, saying China panicked and played it wrong. Canada and the EU are reportedly preparing countermeasures, sparking fears of a global trade war. Fed Chair Jerome Powell noted the tariffs could lead to higher inflation and slower growth, prompting the Fed to delay rate decisions until more clarity emerges.

Semiconductor stocks were significantly weak, as reflected by the 7.6% slump by the Philadelphia Semiconductor Index. Energy stocks were substantially weak, dragging the Philadelphia Oil Service Index and the NYSE Arca Oil Index down by 11.2% and 8.7%. Gold stocks also moved sharply lower amid a nosedive by the price of the precious metal, with the NYSE Arca Gold Bugs Index plunging by 9.5%. Natural gas, financial and computer hardware also saw considerable weakness amid another broad-based sell-off on Wall Street.

Asia-Pacific stocks moved mostly lower, with markets in Hong Kong and mainland China closed for a holiday. Japan's Nikkei 225 Index dove by 2.8% while Australia's S&P/ASX 200 Index slumped by 2.4%. The major European markets displayed substantial moves to the downside. While the French CAC 40 Index tumbled by 4.3%, the U.K.'s FTSE 100 Index and the German DAX Index both plunged by 5%. In the bond market, treasuries extended the spike seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 7 bps to a six-month closing low of 3.98%.