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US President Donald Trump’s “Liberation Day” is fast approaching, and stock markets around the world are tumbling in advance of it.
On Wall Street, the S&P 500 was down 1.3 per cent following one of its worst losses of the past couple of years on Friday. It’s on track to finish the first three months of the year with a loss of 6.4 per cent, which would make this its worst quarter in nearly three years.
The Dow Jones Industrial Average was down 295 points, or 0.7 per cent, as of 9.35am Eastern time on Monday (12.30am on Tuesday AEDT), and the Nasdaq composite was 2.3 per cent lower.
The US stock market’s drops followed a sell-off that spanned the world earlier on Monday as worries build that tariffs coming on Wednesday (Thursday morning AEDT) from Trump will worsen inflation and grind down growth for economies. Trump has said he’s ploughing ahead in part because he wants more manufacturing jobs back in the United States.
In Japan, the Nikkei 225 index dropped 4 per cent. South Korea’s Kospi sank 3 per cent, and France’s CAC 40 fell 1.5 per cent.
Instead of stocks, which can be some of the riskiest possible investments, prices rose for things considered safer bets when the economy is looking shaky. Gold rose again to crest $US3150 per ounce ($5058 per ounce) and was heading toward another record.
Prices for Treasury bonds also climbed, which in turn sent their yields down. The yield on the 10-year Treasury fell to 4.19 per cent from 4.27 per cent late Friday and from roughly 4.80 per cent in January. Its yield has been falling as worries have built about tariffs. On Wednesday, the United States is set to begin what Trump calls “reciprocal” tariffs, which will be tailored to match what he sees is the burden each country places on his, including things like value-added taxes.
Even if Trump’s tariffs end up being less harsh than feared, the worry is that all the uncertainty created by them may cause US households and businesses to freeze their spending, which would hurt an economy that had closed last year running at a solid pace.
On Wall Street, some familiar names were leading the way downward for the US stock market.
Tesla fell 7.3 per cent to bring its loss for the year so far to 39.5 per cent. It’s been the second-worst performer in the S&P 500 so far this year in large part because of fears that the electric-vehicle maker’s brand has become too intertwined with its CEO, Elon Musk.
Musk has been leading US government efforts to cut spending, making him a target of growing political anger, and protests have been swarming Tesla showrooms as a result.
It’s a sharp drop-off following a surge of roughly 90 per cent in the weeks following November’s Election Day, when the thought was that Musk’s close relationship with Trump could help the company’s finances. Tesla’s stock is back below where it was November 5.
Other Big Tech stocks also helped to pull the market lower. They’ve been at the center of the recent sell-off, in large part because critics had been calling their prices too expensive for a while after their prices rose so much faster than their already quick-growing profits in recent years.
Nvidia, which has ridden the frenzy around artificial-intelligence technology to become one of Wall Street’s most influential stocks, fell 4.7 per cent to bring its loss for the year so far to 22.1 per cent.
Stocks of companies that need customers feeling flush enough to spend were also among Monday’s worst performers, as they’ve been so far this year.
United Airlines lost 6.8 per cent, and Delta Air Lines gave up 5.3 per cent.
On the winning side of Wall Street was Mr Cooper, which jumped 18.3 per cent after the home loan servicer said it’s being bought by mortgage company Rocket in an all-stock deal valued at $US9.4 billion ($15 billion). The deal comes just weeks after Rocket acquired real estate listing company Redfin, and Rocket’s stock fell 7.8 per cent.
In stock markets abroad, Thailand’s SET lost 1.5 per cent after a powerful earthquake centered in Myanmar rattled the region, causing widespread destruction in the country, also known as Burma, and less damage in places like Bangkok.
Shares in Italian Thai Development, developer of a partially built 30-story high-rise office building under construction that collapsed, tumbled 27 per cent. Thai officials said they are investigating the cause of the disaster, which left dozens of construction workers missing.
