as mounting trade tensions between the United States and China triggered a widespread selloff in stocks, pushed the dollar to multi-year lows, and sparked panic in the bond market. The rout followed a week of tit-for-tat tariff escalations that investors fear could drag the global economy into a deep recession.
Stock Markets Slide Worldwide
Investor confidence was visibly shaken by the intensifying trade war. U.S. stock futures tumbled, with both S&P 500 and Nasdaq futures falling around 1% in early trading. Asian markets mirrored the panic. Japan’s Nikkei 225 plunged 4.5%, and South Korea’s KOSPI dropped 1.7%. In China, the CSI 300 Index dipped 0.5%, while Hong Kong’s Hang Seng Index fell 0.38%.
The MSCI Asia-Pacific Index, excluding Japan, also lost 0.5%, signaling a broad risk-off sentiment across the region.
Kyle Rodda, a senior financial analyst at Capital.com, said, “There’s clearly an exodus from U.S. assets. A falling currency and bond market is never a good sign. This goes beyond trade war concerns—it’s about fading confidence in economic stability.”
U.S. Bonds See Worst Weekly Loss Since 2001
The bond market saw steep losses, particularly in U.S. Treasuries. Yields on the 10-year Treasury note surged to 4.475%, marking a rise of more than 40 basis points for the week—the steepest climb since 2001, according to LSEG data.
The spike in yields reflects investors rapidly pulling out of long-term bonds, betting on higher interest rates or fearing increased U.S. debt burdens as trade tensions escalate.
James Athey, a fixed income manager at Marlborough, remarked, “The outlook now is darker than it was a month ago. There are too many unanswered questions, and markets hate uncertainty.”
Safe Havens Surge: Gold, Yen, and Swiss Franc Rally
As risk assets slid, investors turned to traditional safe havens. The Swiss franc soared to a 10-year high against the dollar, while the Japanese yen hit a six-month peak. Gold also rallied, touching a new record as fears of a prolonged global slowdown grew.
The U.S. dollar has faced relentless pressure. On Friday, the dollar index—which tracks the greenback against six major currencies—fell below 100 for the first time since July 2023.
The euro jumped 1.7% to $1.13855, its highest level since February 2022, while emerging market currencies like the Malaysian ringgit gained modest relief amid the dollar’s slide.
Trump-China Tariff Spat Reignites Global Fears
This latest market turmoil stems from the renewed U.S.-China trade spat. President Donald Trump recently raised tariffs on Chinese goods to 145%, igniting a fresh round of retaliatory measures from Beijing, which now taxes U.S. imports at up to 84%.
Trade analysts warn that further hikes could push tariffs beyond 100% on both sides, severely disrupting global supply chains and stalling business investment.
Vasu Menon, managing director of investment strategy at OCBC Bank, said, “The short-term outlook for global risk assets remains uncertain given growth and inflation concerns, fast-changing developments, and unstable sentiment on tariffs.”
Wall Street Hit by Renewed Volatility
On Thursday, major U.S. indexes took a hit:
- Dow Jones Industrial Average fell by 2.5%
- S&P 500 lost 3.5%
- Nasdaq Composite plunged 4.3%
The volatility is a reflection of investor uncertainty around how far the U.S. administration will go in its tariff campaign and how China may respond in the coming weeks.
What’s Next for Global Markets?
Market observers are closely watching for any signs of de-escalation or talks between Washington and Beijing. Until then, analysts expect markets to remain volatile and risk-averse, with investors favoring cash, gold, and government bonds from stable economies.
As central banks around the world weigh their responses, speculation is growing that emergency monetary support could be needed if the trade conflict worsens further.
