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27.03.2025 09:04 AM
U.S. stock indexes posted sharp declines on Wednesday, with tech giants and automakers leading the way. Investors are holding their breath in anticipation of the promised announcement from US President Donald Trump about new tariffs on imported cars, a move that could shake up the global market.
Amid expectations of upcoming tariffs from the White House, investors were quickly dumping stocks. Donald Trump planned to hold a press conference on Wednesday, at which he was supposed to make a key announcement regarding restrictive measures against the foreign auto industry. This initiative, which is a continuation of his aggressive trade policy, risks undermining stability in international economic relations.
Automotive analysts are already predicting that new tariffs could become a catalyst for a sharp jump in car prices and lead to production disruptions. Recall that Trump has been hinting at this step for several weeks, promising to introduce retaliatory measures starting April 2.
Indecision and uncertainty have done their job. Tesla shares lost 5.6% at once, while General Motors shares fell by 3.1%. Financial players are concerned not only about the scale of possible tariffs, but also about the response from other countries. US trading partners could impose mirror measures, which threatens to undermine global supply chains and collapse demand.
Technology also did not escape pressure. Shares of chipmaker Nvidia fell by almost 6%, while Broadcom lost almost 5%. This provoked a 3.3% drop in the PHLX semiconductor index. The sector turned out to be especially sensitive to worrying economic signals, since it directly depends on global trade and strong demand for electronics.
Amid all this uncertainty, the main stock indexes ended the day in the red. The S&P 500 fell 1.12% to close at 5,712.20. The Nasdaq lost 2.04% to close at 17,899.02. Even the more resilient Dow Jones retreated 0.31% to 42,454.79.
The stock market has once again shown how vulnerable it is to political decisions and international conflicts. It remains to be seen whether the near future will bring stabilization or another round of volatility.
Of the 11 key sectors that make up the S&P 500, more than half ended the day in the red. The information technology sector performed the worst, losing 2.46% - a disappointing reflection of panic sentiment amid geopolitical and economic concerns. The telecommunications sector followed suit, falling 2.04%. Investors continue to dump risk assets, wary of potential trade restrictions.
As global uncertainty intensifies, skepticism is growing in corporate America. The latest survey of top managers showed that optimism in the management circles waned in the first quarter. The main reasons cited were instability of trade policy and concerns about inflationary pressures.
Fearing possible cost increases due to new tariffs, American companies began to actively replenish their warehouses. The result was not long in coming - last month the US recorded an unexpected increase in orders for durable goods. However, this figure reveals a worrying trend: businesses are not so much responding to demand as hedging against future shocks.
Investment bank Barclays has revised its market expectations. The new forecast for the S&P 500 index is 5,900 points, while analysts previously expected growth to 6,600. Since the beginning of 2025, the index has already lost about 3%, and the tech-heavy Nasdaq - more than 7%, which underscores the strength of the current pressure on the stock market.
The focus this week will be on the Federal Reserve's key inflation indicator, the Personal Consumer Expenditure (PCE) report, due out Friday and likely to influence the Fed's monetary policy going forward.
Minneapolis Federal Reserve President Neel Kashkari has voiced doubts about the effectiveness of Trump's tariff strategy, saying that such measures could only fuel inflation rather than improve the economy. He also said that such risks may require tightening monetary policy and raising rates.
Amid the general turbulence, one of the few positive pieces of news came from discount retailer Dollar Tree. The company's shares rose 3.1% after announcing talks to sell its Family Dollar unit to a private equity consortium. The deal could reach $1 billion, which has already inspired investors.
GameStop shares also showed a major jump, rising by almost 12%. The reason is an unexpected but ambitious decision by the board of directors to include Bitcoin in the company's treasury reserve. This step is not only an attempt to modernize financial policy, but also an attempt to attract the interest of crypto-oriented investors.
On Thursday, global stock markets continued to decline: this time, the blow came from Asia. The main reason was the loud statement by US President Donald Trump about the introduction of a long-discussed 25% tariff on car imports. The decision, announced late on Wednesday evening, immediately shook the markets - Japan and South Korea reacted especially sharply.
Analysts are already warning: the new measures will hit the auto giants from Europe and East Asia the most painfully. This is a direct challenge to Toyota, BMW, Hyundai and other manufacturers whose models have firmly established themselves in the American market.
Japan's Nikkei stock index fell by 1%, while South Korea's KOSPI fell by 1.3%. The carmakers were the hardest hit: Toyota shares lost 2.6%, Mazda and Subaru fell by about 6% each. The market immediately reacted to the prospect of a narrowing of one of the largest export destinations - the American car market.
Pessimism has also gripped European traders. Futures on the STOXX 50 index, which covers the continent's leading companies, fell by 0.5%, and on the British FTSE - by 0.2%. Investors are preparing for a subdued start to the trading session amid growing trade tensions.
Despite the tough measures, Trump made a caveat: the expected retaliatory tariffs for other countries, according to him, will be relatively soft. As for China, the president allowed for the possibility of concessions. Washington is considering the idea of easing the tariff burden on Beijing in exchange for an agreement on TikTok, which is at the center of US-Chinese tech tensions.
Amid a general decline, the Chinese market showed unexpected resilience. The blue-chip CSI300 index added 0.4%, and Hong Kong's Hang Seng rose 1%. The growth was driven by the electric vehicle sector: BYD, one of the industry leaders, rose 2.3%.
Thanks to the positive dynamics in China and Hong Kong, the broader index of Asia-Pacific stocks excluding Japan remained stable. This helped offset some of the losses caused by the sharp decline in the Japanese economy.
Wall Street stock futures recovered from a sharp decline and rose 0.1%. However, optimism was guarded: the stock market remains under pressure amid investor concerns about trade restrictions. In particular, the tech-heavy Nasdaq lost more than 2% on Wednesday, which confirms the high degree of instability in the current environment.
US automakers suffered heavy losses after the announcement of new tariffs on cars. General Motors shares fell 6%, while Ford shares lost almost 5%. Investors, who are not hiding their anxiety, began selling off shares of these companies, fearing that such steps will lead to higher car prices and reduced demand.
The first official responses to the US trade measures were not long in coming. Japanese Prime Minister Shigeru Ishiba said that Japan is considering all possible options in response to the tariffs, which could worsen the already difficult economic relations between the two countries. Canada, in turn, also warned that it is ready to impose retaliatory tariffs if the US does not reconsider its position. The European Union expressed regret, but said that it will seek solutions through diplomatic channels and negotiations.
The US dollar is strengthening on currency markets. The dollar index, which measures its value against six major world currencies, fell by 0.3% to 104.32. However, this did not prevent the dollar from reaching a three-week high, reaching 104.71 during overnight trading. The strengthening of the dollar is caused by growing risks associated with global economic uncertainty and the prospect of tariff wars.
The currency markets continue to experience increased volatility: the euro fell to a three-week low yesterday, reaching $1.0731. However, further losses were avoided as the European currency rebounded from its 200-day moving average and strengthened by 0.3% on Thursday, reaching $1.0780.
The Japanese yen, on the other hand, managed to recover some of its losses overnight. It rose by 0.2% on Thursday morning, reaching 150.21 per dollar, which became a symbol of increased interest in the traditional safe haven amid global risks.
The US Treasury market remained stable in the Asian session after an overnight rise. The yield on 10-year notes held at 4.3537%, showing a modest increase of 5 basis points yesterday. Investors are still assessing the risks associated with US tariff policy and the prospects for a monetary response from the Federal Reserve.
Growing uncertainty on the global stage caused by US auto tariffs has put gold back in the spotlight. The precious metal rose 0.5% to $3,035 an ounce, just shy of its all-time high of $3,057.
US gold futures also rose 0.6% to $3,039. Safe haven demand is growing as the April 2 deadline for possible retaliatory measures from major US trading partners approaches.
At 05:35 GMT, spot gold was at $3,033.20 an ounce, showing a steady uptrend amid global unrest.
While gold is gaining ground, other precious metals are not showing the same optimism. Silver slipped slightly, by 0.1%, to $33.68 an ounce. Platinum fell by 0.3%, falling to $971.60, and palladium fell by 0.4%, to $964.01. Such a divergence in dynamics highlights the selective preferences of investors in an unstable environment.
Oil prices show a restrained growth. A barrel of Brent rose by 0.1%, reaching $73.87, and American WTI also added 0.1%, rising to $69.73. Although the movement does not look sharp, this is a signal that traders do not rule out geopolitical consequences from Washington's new tariff initiatives, especially if there is a response from key energy powers.
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*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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