Late-Night Plunge: Trump's Tariffs Trigger Global Market Turmoil

Late-Night Plunge: Trump's Tariffs Trigger Global Market TurmoilA shocking plunge in US stocks occurred late at night, with tech giants leading the decline and sending ripples of turmoil across global markets. Nvidia's stock price fell nearly 5%, while Broadcom dropped over 4%, leaving investors on edge

Late-Night Plunge: Trump's Tariffs Trigger Global Market Turmoil

A shocking plunge in US stocks occurred late at night, with tech giants leading the decline and sending ripples of turmoil across global markets. Nvidia's stock price fell nearly 5%, while Broadcom dropped over 4%, leaving investors on edge. However, amidst the downturn, Hut 8 Mining bucked the trend, surging 5.3% after announcing a partnership with Eric Trump, son of former President Donald Trump, to establish a US-based Bitcoin company. This news sent Bitcoin soaring, breaking the $83,000 barrier. However, data from Coinglass revealed that over 100,000 cryptocurrency investors were liquidated in the past 24 hours, highlighting the extreme volatility in the market.

Dragged down by the US market, Chinese stocks listed in the US (Chinese ADRs) also experienced a collective decline, with the Nasdaq Golden Dragon China Index falling 1%. Individual stocks saw significant losses, including NIU (down over 7%), Dingdong Maicai (down over 6%), NIO (down 4%), and Baidu (down over 3%), demonstrating the impact across tech and new energy sectors.

Slowing US Economic Growth Fuels Rate Cut Expectations

The latest US economic data paints a worrying picture. A survey published Monday by major US financial media outlets indicates that policy uncertainty and the Trump administration's new comprehensive tariff policies are pushing the US economy into stagflation. The survey of 14 economists revealed that the US first-quarter GDP growth rate was only 0.3%, significantly lower than the 2.3% reported for the fourth quarter of 2024, representing the weakest growth since the COVID-19 pandemic in 2022.

Based on this, Goldman Sachs economists predict three rate cuts by the Federal Reserve in July, September, and November, a significant deviation from their earlier forecast of two rate cuts this year and one in 2026. The report also predicts that the US will impose a 15 percentage point retaliatory tariff on the European Union, potentially increasing the effective US tariff rate on the EU by 20 percentage points from 2025. This could push the EU's core inflation rate in the fourth quarter to 2.1%. Goldman Sachs forecasts non-annualized growth rates for the EU GDP of 0.1%, 0%, and 0.2% in the second, third, and fourth quarters, respectively.

Trump's Shifting Policies Exacerbate Market Uncertainty

The primary driver of the market decline is Trump's tariff policy. His recent erratic behavior has further heightened market uncertainty regarding future expectations. Trump previously threatened to impose a 25% to 50% secondary tariff on all Russian oil, but later stated that oil sanctions would not be implemented at this time, and subsequently withdrew the tariff increase after claiming progress on the Ukraine conflict. This inconsistency has cast a shadow over the global economy.

Italy's central bank governor, Ignazio Visco, expressed concern, stating that the contradictory US trade policies are increasing economic uncertainty, and that the European Central Bank should proceed cautiously regarding further interest rate cuts. Visco emphasized that global economic uncertainty remains high, with persistent geopolitical and trade tensions hindering international trade, exacerbating global economic fragmentation, and slowing down production activity. This impact is particularly significant for European economies heavily reliant on manufacturing and foreign trade.

Larry Fink, CEO of BlackRock, also pointed out that the trade conflicts initiated by Trump have pushed investor anxieties about the global economy to their highest levels in recent years. The US stock market is experiencing its worst quarterly performance in nearly three years, with both the S&P 500 and the Nasdaq, heavily weighted with tech stocks, suffering significant losses. Moody's has raised the probability of a US recession from 15% to 40%, while Goldman Sachs has increased its prediction from 20% to 35%.

Global Markets Face Grave Challenges

In summary, the confluence of slowing US economic growth, persistent inflationary pressures, and the uncertainty stemming from Trump's policies presents a severe challenge to global markets. The tech stock plunge, the extreme volatility in the cryptocurrency market, and the collective decline of Chinese ADRs all reflect investor anxieties about the future economic outlook. While the increased expectation of US interest rate cuts might offer some relief, their effectiveness in addressing the current complex situation remains to be seen. The erratic nature of Trump's policies further exacerbates global economic uncertainty, requiring investors to closely monitor developments and cautiously manage market risks. Given the intensifying complexity and uncertainty in the global economy, investors need to remain vigilant, closely follow market trends, and manage risk effectively. The future market trajectory remains subject to many variables, necessitating continuous monitoring of macroeconomic conditions and policy changes for rational responses to the challenges.