United States

The introduction of widespread tariffs by the US led to a sharp collapse in risk assets on Thursday, with the S&P 500 experiencing its largest decline since 2020. The higher prices resulting from the tariffs, combined with anticipated disruptions to supply chain models as global trade arrangements are upended, spooked investors.

At the close, index levels were sharply lower. The Dow dropped 3.98%, falling by 1,679 points. The S&P 500 fell 4.84%, closing at 5,396, a loss of 275 points. All sectors of the S&P 500 were lower, except for consumer staples. The Nasdaq Composite plummeted 5.97%, closing at 16,550, down 1,050 points. The broad, far-reaching nature of the tariffs had not been priced into the markets, with some calling it a “worst-case scenario.”

The expectation that the US administration’s policy measures would lead to a self-imposed recession led traders to conclude that lower interest rates would be coming. This resulted in further drops in bond yields, with the 10-year falling 9 basis points to 4.04%, and the 2-year falling 16 basis points to 3.70%. Corporate bonds did not fall as much as credit spreads widened, indicated by the Markit CDX North American Investment Grade Index, a basket of credit default swaps widening on Thursday. The US dollar weakened significantly, dropping 1.50% on the Bloomberg Dollar Index, its lowest level since October 2024.

The falls were widespread, with the biggest drops coming from companies exposed to supply chain issues and those with overseas production. Apple, which manufactures most of its iPhones in China, fell 9.25% to $203.19, and Amazon dropped 8.98% to $178.41. Tech stocks were also hit hard, with Nvidia falling 7.81% to $101.80 and Meta collapsing 8.96% to $531.62. Fears of potential restrictions on US technology stocks from Europe, in response to the tariffs, contributed to the decline.

Banks were also heavily affected, with the banking sub-index falling 9.02%, particularly in regional banks. Expectations of increased arrears due to an unpriced-in recession were the primary cause. Wells Fargo dropped 9.12%, while regional lender Trust Financial Group fell 10.88%. Larger-cap banks also saw significant losses, with Citigroup dropping 11.4% and Bank of America falling 11.06%, closing at $37.22.

While the declines were substantial, volatility is expected to persist. The VIX finished the day at 29.68, well above its long-term average of 17.6%. On Friday, traders will be looking to the monthly employment report for any signs of a slowdown in the jobs market. More importantly, they will be awaiting a speech from Federal Reserve Chairman Jerome Powell. When Powell last spoke, his comments helped soothe investor concerns, triggering a rally in share indexes. Investors worldwide will be hoping for a similar outcome this time.

Europe

European shares plunged on Thursday as investors reacted to the new tariff regime announced by the US. The Euro Stoxx 600 dropped 2.57%, falling 13.8 points to 523.12. The major regional exchanges in France and Germany fell 3.31% and 3.01%, respectively. In the UK, the declines were more moderate, with the FTSE 100 dropping 1.55% to 8,474.74, a loss of 133 points.

On the Euro Stoxx 600 index, there were significant differences between sectors. Only three of the 11 sectors saw gains, with Utilities leading the way (+3.10%) and Real Estate (+2.19%). The sectors that advanced were generally defensive stocks, with a domestic focus, benefiting from lower interest rates. On the other hand, the tech (-5.41%) and energy (-5.19%) sectors suffered the most.

Traders increased positions that would benefit from potential cuts in official rates by the European Central Bank (ECB). As a result, bond yields fell. In Germany, the 2-year bond yield dropped by 9 basis points to 1.94%, while the 10-year yield decreased by 7 basis points to 2.65%. In the UK, the declines were more pronounced, with the 10-year yield falling by 11 basis points to 4.52%, and the 2-year yield dropping 16 basis points to 4.00%. The EUR/USD rallied strongly as the US dollar weakened against other currencies. The EUR/USD rose 1.53% to 1.1019, and the GBP/USD increased by 0.60% to 1.3083.

The tech sector led the decliners, falling 5.41%, followed by banks, which saw a significant drop of 5.49% in the banking sub-sector. Globally oriented banks were hit hardest, with HSBC collapsing 8.87% and Standard Chartered dropping 13.32%. Luxury goods and consumer discretionary companies also experienced large losses, with LVMH falling 5.62% and Adidas down 11.72%.

The US’s imposition of a 10% “retaliatory tariff” effectively increases the tariff on EU goods to 20% when previous tariffs are factored in. While exporters to the US account for only 12% of Euro Stoxx 600 revenue, strategists warned that the second-order effects, such as weaker growth and the potential for a broader global tariff war, could lead to lower earnings across the board. European leaders have already begun discussing the possibility of targeting digital services, where the US has significant surpluses. French President Macron even called for European companies to suspend investments in the US. Traders are now awaiting any formal response from the EU and the UK.

*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.

Commodities

In the biggest decline in three years, oil prices collapsed as traders concluded that global economic growth would plummet due to tariffs. The West Texas Intermediate (WTI) contract dropped by 7.04%, falling to US$66.66, a decrease of US$5.05. Brent crude also tumbled, down 6.62% to US$69.99, losing US$4.96. Adding to the already bearish sentiment on Thursday, OPEC+ agreed to increase oil production in May by more than expected. Members of the cartel agreed to boost production by 411,000 barrels per day, up from the widely expected 135,000 barrels. Imports of oil, gas, and refined products were exempt from the new tariff regime. Market analysts anticipate continued volatile price movements in the near term as any countermeasures are announced.

Copper also suffered a significant decline, falling by US$334, or 3.4%, to US$49,336 per tonne. Analysts expect further losses as economic growth slows. Iron ore lost an additional 94 cents, continuing the drops seen in Asia on Thursday, and closed at US$100.94 in New York. This represents a 1.5% drop from the same time yesterday, even before any announcements.

Gold initially rallied, reaching US$3,167 per ounce, but then retreated. The precious metal fell by US$29.16, or 0.93%, to close at US$3,106. The decline was attributed to the need for investors to raise cash for margin calls and profit-taking. Silver, which is more industrial-focused, dropped by 6.28%, settling at US$31.76. Bitcoin also dropped, falling by 4.3% to US$81,891.

Economic Calendar

US:

• Non-Farm Payrolls (Mar)
• Fed Chair Powell Speech