Global Markets Hit Hard by U.S.-China Tariff Clash on April 4, 2025
April 4, 2025, saw sharp declines in global stocks, commodities, and crypto as U.S.-China trade tensions escalated. Bonds rallied amid risk aversion.
On Friday, April 4, 2025, global financial markets plunged as U.S. President Donald Trump announced new tariffs, prompting swift retaliatory action from China. The sudden escalation in trade tensions triggered a wave of sell-offs across major asset classes, including equities, commodities, and cryptocurrencies. Meanwhile, bond markets surged as investors moved capital into safer assets.
Equities: The S&P 500 fell sharply, dropping 10.5% over two days—its fourth-largest two-day loss since the index began in 1957.
Bonds: The yield on the 10-year Treasury note declined to 3.931%, its lowest since October, as investors rushed toward safe-haven assets.
Economic Update: President Trump defended the new tariffs, claiming the move was intended to lower borrowing costs for both consumers and the government.
Eurozone Market Overview
Equities: European markets faced their worst trading session since 2020, with luxury stocks such as LVMH and Kering falling significantly due to their exposure to China.
Economic Update: The Sentix investor confidence index plummeted to -19.5 in April from -2.9 in March, marking its lowest level in over a year, driven by growing tariff concerns.
United Kingdom Market Overview
Equities: The FTSE 100 dropped nearly 5%, its steepest one-day decline since March 2020, amid rising fears over global trade tensions.
Economic Update: The Office for National Statistics came under scrutiny for data quality issues, prompting calls for immediate improvements to enhance economic reporting accuracy.
China Market Overview
Currency: The Chinese yuan weakened by 0.4%, trading at 7.3122 against the U.S. dollar as the market reacted to the trade dispute.
Economic Update: China imposed retaliatory tariffs of 34% on all U.S. imports, emphasizing its demand for “equal-footed consultation” and a strong stance against Washington’s moves.
Japan Market Overview
Equities: The Nikkei 225 closed down 2.75%, with a weekly loss of 9%—its worst since March 2020—driven by fears of a global recession.
Economic Update: Bank of Japan Governor Kazuo Ueda warned that the escalating U.S. tariffs could harm Japan’s economy and delay interest rate hike plans.
EMEA Economic Developments
EU finance ministers scheduled urgent discussions to assess the broader economic fallout from U.S. tariffs, focusing on supply chain disruptions and increased business costs across Europe, the Middle East, and Africa.
Commodities Market Reaction
Oil: Prices tumbled by 7%, hitting their lowest point in over three years amid concerns about weakened demand due to China’s tariff response.
Metals: Industrial metals came under pressure, with investors worried about a slowdown in global manufacturing caused by rising trade barriers.
Cryptocurrency Market Impact
Bitcoin: The world’s largest cryptocurrency slid below $80,000, trading near $79,000—a 5% drop in 24 hours—as risk-off sentiment took hold.
Summary:
April 4, 2025, marked a pivotal moment in global financial markets, as intensifying U.S.-China trade tensions drove dramatic losses in equities, commodities, and cryptocurrencies. While risk assets plunged, bond markets surged as investors sought safety amid rising uncertainty.
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