Global stocks experienced a significant downturn on Friday, while the dollar suffered a considerable drop amidst escalating trade tensions that have instigated fears of recession and undermined confidence in U.S. assets. The dollar fell to its lowest point in a decade against the Swiss franc and hit a six-month low against the yen as investors gravitated towards safer assets. The euro surged by 1.7 percent, reaching $1.13855, a level not observed since February 2022, while gold, recognized as a safe haven during crises, achieved yet another record high.
The market turmoil is largely attributed to the intensifying trade war between the United States and China, particularly after U.S. President Donald Trump raised tariffs on Chinese imports to an effective rate of 145 percent. In retaliation, China has also increased its tariffs on U.S. goods, prompting concerns that these could exceed the current 84 percent. Simultaneously, the selloff in U.S. Treasuries accelerated during Asian trading hours, with the yield on the 10-year note climbing to 4.45 percent—an increase of about 45 basis points over the week, which marks the most significant rise since 2001.
In Europe, stocks adjusted their early gains, resulting in a nearly 1 percent decline in the STOXX 600 for the day and a projected 1.7 percent drop over the week. The Nikkei in Japan fell by 4.3 percent, and South Korean stocks experienced a nearly 1 percent decrease. Although U.S. Treasury Secretary Scott Bessent conveyed hope regarding trade negotiations with over 75 countries interested, the outlook remains clouded with uncertainty, as noted by financial analysts.
U.S. futures for the S&P 500 and Nasdaq hovered around flat, witnessing erratic trading patterns. The recent anxiety over tariffs has led to a renewed wave of investment into safe havens, illustrating the uncertain short-term outlook for global risk assets amid ongoing concerns regarding growth and inflation. Moreover, a turbulent selloff in U.S. Treasuries has reignited fears about the stability of the world’s largest bond market, with yields hitting levels that could indicate a serious economic downturn.
Meanwhile, gold reached an unprecedented price of $3,210 an ounce, while oil prices rose slightly but remained under pressure due to ongoing trade war concerns.