Yields spike, Stocks Sink, and Oil hits new lows
Markets dropped as US-China tariffs spark bond selloff, recession fears, and $5.8T stock losses amid oil and currency volatility
U.S. Market Dropped
U.S. markets were rocked Wednesday as 104% tariffs on Chinese imports took effect. The S&P 500 futures dropped 2% to 4,914.50, Dow futures dropped 2.4%, and Nasdaq futures declined 1.8%. The S&P 500 has lost $5.8 trillion in value over four days, nearing a 20% plunge from its peak.
The bond market saw aggressive selling. The 10-year Treasury yield jumped 17 basis points to 4.44%, and the 30-year briefly rose above 5% before settling around 4.9%. A $39 billion auction of new 10-year notes will test demand amid fears of waning faith in U.S. sovereign debt.
Tariff threats extended to the pharmaceutical sector, sending shares of Pfizer, Merck, and Eli Lilly down more than 3%. Delta Air Lines pulled its 2025 guidance, citing “slower growth,” with shares down 41% this year.
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China and Asian Markets
China retaliated with 84% tariffs on U.S. goods. Despite trade tensions, Chinese equities rose on state-led share buybacks: the Shanghai Composite gained 1.3%, and the Hang Seng rose 0.7%. The yuan weakened to 7.3498 per dollar, its lowest since 2007. China’s central bank asked state-owned banks to cut dollar purchases to stabilize the currency.
TSMC may face penalties over Huawei-linked chip exports, adding to Taiwan’s woes. The Taiex plunged 5.8%, with Hon Hai Precision down 10% and TSMC off 3.8%.
Japan’s Nikkei dropped 3.9%, South Korea’s Kospi declined 1.7%, and Australia’s ASX 200 lost 1.8%. India’s Sensex dropped 0.5% after a rate cut.
European Market Dropped
European indexes mirrored the global downturn. Germany’s DAX dropped 4.1%, France’s CAC 40 fell 3.9%, and the UK’s FTSE 100 slid 3.8%. Since April 1, the STOXX 600 has lost $1.4 trillion in market value. UK 30-year bond yields hit a 26-year high, reflecting widespread pressure on global debt markets.
The euro climbed 1.2% to $1.1088, the pound rose 0.4%, while the dollar fell 0.7% on the Bloomberg Dollar Spot Index.
Commodities while Oil Dropped
Oil prices tumbled as economic fears mounted. West Texas Intermediate crude dropped 6.1% to $55.97 a barrel, and Brent crude dropped to $59.53. Gold surged 2.3% to $3,050.82 per ounce, while haven demand pushed the yen up 1.5% to 144.07 per dollar.
Crypto and Asset Class Movements
Bitcoin dropped 1.1% to $76,192, and Ether declined 2.4% to $1,445. The MSCI World Index dropped 0.6%, underscoring global investor caution.
Policy and Institutional Reaction
Fears of recession are rising, with JPMorgan and Goldman Sachs raising odds amid inflation risks. Fed officials are reviewing the March FOMC minutes. In Europe, policymakers are watching bond markets closely.
Bridgewater’s Ray Dalio warned of a “once-in-a-lifetime” breakdown in monetary and geopolitical systems, while Treasury Secretary Scott Bessent downplayed the bond rout as “deleveraging convulsions.” Still, volatility has many fearing systemic financial stress.
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