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How Are Stocks Reacting to the Tariff Shock?
Equity markets worldwide faced heavy selling pressure, with Europe’s STOXX 600 index falling 1.3%, driven by a steep 4.3% decline in auto stocks—one of the sectors most vulnerable to trade disruptions. In the U.S., S&P 500 futures dipped 0.3%, while the Dow Jones Industrial Average fell 79 points in pre-market trading. The S&P 500, already 5% off its February high, has now posted its worst daily loss since December, dropping 1.8%.
Asian markets mirrored these losses, with Japan’s Nikkei falling 1.2% and Taiwan’s benchmark index dropping 0.7%. Investors rushed to safer assets, sending U.S. 10-year Treasury yields to their lowest since October at 4.164%, while German 10-year bonds also saw declines.
China, Canada, and Mexico Retaliate—What’s Next?
China wasted no time responding, announcing 10%-15% tariff hikes on $21 billion worth of U.S. agricultural and food products. Additionally, Beijing placed 25 U.S. firms under export and investment restrictions and warned of further retaliatory steps if tensions persist.
Canada and Mexico, which have enjoyed a tariff-free trade relationship with the U.S. for decades, also hit back. Canada announced immediate 25% tariffs on $20.7 billion worth of U.S. imports, with a second wave of levies planned if tariffs remain in place for 21 days. Mexico is expected to follow suit, raising further concerns about supply chain disruptions across North America.
The energy market was not spared, with Brent crude falling 0.9% to $70.72 per barrel, its lowest level since December. Reports indicate OPEC+ will proceed with its planned oil output increase in April, a move that could keep pressure on prices.
Meanwhile, industrial metals, a key indicator of global trade activity, also softened. Gold held steady as a safe-haven asset, but copper and aluminum prices saw declines amid fears of weakening global demand.
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