Stock markets experienced a significant decline on Friday, marked by the S&P 500 and Nasdaq registering their most substantial one-day percentage drops since April 10. This decline was accompanied by a decrease in Treasury yields and a weakening of the U.S. dollar as a result of comments made by U.S. President Donald Trump reigniting concerns over a potential U.S.-China trade conflict.
Following the close of markets on Friday, Trump announced an increase in tariffs on Chinese exports to the U.S. to 100 percent and the implementation of export controls on critical software as a response to China’s restrictions on rare earth minerals essential for technology and manufacturing. This announcement came after an earlier social media post by Trump hinting at additional tariffs on Chinese goods and the possibility of canceling a meeting with President Xi Jinping.
The news of these developments caused market turmoil, raising worries about the impact of the escalating trade tensions on the U.S. economy. The announcement of tariffs on “Liberation Day” on April 2 had triggered significant market volatility. Technology-related shares were the most affected, with the S&P 500 technology index falling by four percent, and the semiconductor index declining by 6.3 percent. U.S.-listed Chinese companies also witnessed a drop, with Alibaba Group Holding falling by 8.4 percent and JD.com Inc. declining by 6.2 percent.
Oil prices plummeted by more than $2 per barrel due to concerns about trade disruptions affecting demand forecasts. Meanwhile, spot gold prices surged above the $4,000 per ounce milestone.
Market analysts expressed surprise at Trump’s actions, stating that they had introduced uncertainties into a market already under scrutiny for being overly optimistic. The Dow Jones Industrial Average closed down by 1.90 percent, the S&P 500 by 2.71 percent, and the Nasdaq Composite by 3.56 percent.
The week saw the three major U.S. stock indexes posting losses, with the S&P 500 recording its most significant weekly decline since May. Global stocks, as measured by MSCI, fell by 2.11 percent to 972.51 points, while European shares ended 1.25 percent lower, erasing weekly gains due to Trump’s remarks.
U.S. Treasury yields reached multi-week lows as investors sought refuge in safe-haven assets following Trump’s statements. The U.S. dollar depreciated against other major currencies, with the euro and yen gaining ground. The dollar index fell by 0.4 percent to 98.99, with the yen strengthening by 0.86 percent and the euro by 0.38 percent against the greenback.
In France, President Emmanuel Macron reappointed Sebastien Lecornu as prime minister, causing some market instability after his resignation earlier in the week. U.S. crude oil settled at $58.90, Brent at $62.73, and spot gold rose to $4,008.74 per ounce.
