Stock markets and dollar plunge

Global stock markets fell sharply yesterday, with European markets, for example, hitting their lowest levels in two months, after the new round of tariffs announced by US President Donald Trump on Wednesday evening. The US president announced tariffs of 20% on products imported from the European Union, 34% on those from China, 31% on those from Switzerland, 26% on those from India, 10% on those from the UK, and 10% on those from Brazil. Trump also imposed tariffs of 46% on products imported from Vietnam, 49% on those from Cambodia, 37% on those from Bangladesh, and 32% on those from Indonesia. The White House leader said that any product entering the US would be taxed at least 10%.

In this context, the pan-European Stoxx 600 index fell by 2.2% at 2:51 p.m. local time, the German DAX - by 2.3%, the Paris CAC 40 - by 2.9%, the London Stock Exchange's FTSE 100 - by 1.6%, the Italian FTSE MIB - by 2.5%. Shares of German bank Deutsche Bank AG fell by 5.9% at 2:51 p.m., those of France's BNP Paribas SA - by 4.5%. Shares of French carmaker Renault SA fell by 3%, those of German industrial group ThyssenKrupp AG - by 5.4%.

On the New York Stock Exchange, the Dow Jones Industrial Average index fell by 2.7% at the opening of the trading session, the S&P 500 - by 3.1%, and the Nasdaq Composite - by 4.2%. Shares of American carmaker General Motors were down 0.7% at 09:40, while industrial group General Electric was down 3.3%.

In Asia, Japan's Nikkei 225 index fell 2.8%, Hong Kong's Hang Seng index fell 1.5%, Seoul's Kospi index fell 0.8%, and China's CSI 300 index fell 0.6%.

Also yesterday, gold prices hit a new all-time high as US trade policies fueled fears about the global economy, sending investors to safe-haven assets. Yesterday morning, gold had a spot price of $3,167.57 per ounce, after a 19% advance since the beginning of the year and 71% since the end of 2022. In the second part of yesterday, however, the spot price lost more ground, reaching $3,068.42/ounce.

The price of oil futures was in major decline: -6.7% on the European market, -7.2% on the American one, at 09.19 local time.

The yields of government bonds in the euro zone were also declining, amid trade tensions. Ten-year German government bond yields fell nearly eight basis points to 2.648%, their lowest since early March, while two-year yields fell to 1.958%, their lowest since December 2024.

The euro rose more than 2% yesterday to $1.1088. The greenback fell more than 1.1% against the pound, which was trading at $1.3156, and 1.76% against the Japanese yen, to 146.65 yen.

Yesterday, Deutsche Bank warned of the risk of a crisis of confidence in the US dollar, saying that major shifts in capital flow allocations could overwhelm the currency's fundamentals and send currency movements spiraling out of control. "Our overall message is that there is a risk that major shifts in capital flow allocations could overwhelm currency fundamentals and currency movements could become uncontrollable," said George Saravelos, an analyst at Deutsche Bank, adding that an acceleration of the dollar's decline would be bad news for global central banks.

• Fitch: "US tariffs have reached their highest level since 1910"

US tariffs on all imports have now skyrocketed from just 2.5% in 2024, Olu Sonola, director of US economic research at Fitch Ratings, said on Wednesday, according to Reuters. After Trump announced the new tariffs, he said: "That rate was last seen around 1910. This is going to be a real game changer, not just for the U.S. economy, but for the global economy. Many countries are going to probably go into recession. We can throw off most of our predictions if this level of tariffs remains in place for an extended period of time."

• Von der Leyen: "EU ready to respond to new tariffs"

The President of the European Commission, Ursula von der Leyen, said yesterday that the European Union "is ready to respond" to the imposition of 20% tariffs by the United States and that it is working on new measures, EFE reports, according to Agerpres.

"We are already finalizing the first package of countermeasures in response to steel tariffs, and we are now preparing more measures to protect our interests and businesses if negotiations fail," said Ursula von der Leyen, noting: "We will always promote and defend our interests and values, and we will always defend Europe."

Ursula von der Leyen expressed her willingness to dialogue with the US, emphasizing that "there is an alternative way" and that "it is not too late to address the problems through negotiations." The European Commission President also said that the reciprocal tariffs announced by the US president "will harm everyone" and especially "the most vulnerable", stressing: "There will be dire consequences for millions of people on the planet. Also for the most vulnerable countries, which are now subject to some of the highest US tariffs, the opposite of what we intended to achieve. Millions of citizens will have to deal with higher food prices. Medicines will cost more, as will transport. Inflation will rise, and this will particularly affect the most vulnerable citizens". Von der Leyen appealed for the unity of the EU and stressed that its internal market is a "safe haven" in the face of the trade war. "Europe has everything it needs to weather the storm" of the tariffs, she said, stressing that the EU "will stand united and defend each other".

At the same time, the European Trade Union Confederation (ETUC) yesterday called on the European Union to provide a "comprehensive" response to "stabilize the economy and save jobs," as it did during the Covid-19 pandemic. The ETUC said the new tariffs imposed by the US would "hit workers harder."

• China urges US to immediately cancel new tariffs

China yesterday urged the United States to "immediately cancel" new tariffs announced by Donald Trump, calling for "dialogue" in the face of tariffs that "endanger global economic development."

"China urges the United States to immediately cancel unilateral tariffs and properly resolve disputes with its trading partners through fair dialogue," the Chinese Ministry of Commerce announced, adding: "China firmly opposes this and will take countermeasures to safeguard its own rights and interests. There are no winners in a trade war and no way out of protectionism."

Some sources cited by Bloomberg say that the Chinese state has taken measures to restrict local companies' investment in the United States - a decision that would give Beijing more leverage in potential trade negotiations with the Trump administration.

Several departments of China's National Development and Reform Commission (NDRC) have been instructed in recent weeks to suspend registrations and approvals for companies seeking to invest in the United States, the sources said.

• Italian employers revised their economic forecasts

Italy's main employers' organization (Confindustria) revised its estimates for economic growth on Wednesday, warning that the looming trade war risks worsening the forecasts even further, Reuters reports, according to Agerpres.

Confindustria announced that it expects Italy's Gross Domestic Product to grow by 0.6% this year, half the official growth forecast of 1.2% by the Government in Rome and less than the 0.9% advance expected by Confindustria in October last year. The association expects the growth rate to accelerate to 1% in 2026.

Italy, the third largest economy in the eurozone, recorded a modest growth of 0.7%, both in 2024 and 2023.

• XTB: "Donald Trump scared investors with the trade war"

Donald Trump has fulfilled all his threats he has made recently, the tariffs he announced being, in fact, a bag of bad news for investors, especially because the consequences will be felt throughout the world, including in the European Union, show analysts at XTB - an investment company on international stock exchanges.

The specter of a trade war now looms over the world, and several major economies - including the European Union and China - have not yet responded to the "draconian" tariffs of the United States, shows the cited source.

In the context of the American economy - in which uncertainty about the future and fear of recession have already taken root - calling the moment of imposing taxes "Liberation Day" seems excessive, point out XTB analysts, adding: "However, the name may have a more subtle meaning. The leader in the White House emphasized that, in recent decades, the United States has become far too dependent on foreign goods and the economies of its neighbors. As a result, the country has lost its self-sufficiency, and its power has become "fragile". He states that today, the United States is a nation vulnerable to a series of extreme global events.

Now, it seems that these "tariff wars" aim to end the era of "unfettered" capitalism, which, in search of higher margins, relied heavily on free trade.

At the same time, the rivalry with China cannot be ignored. In this context, the relaunch of American industry seems necessary for the interests of The United States - and its military power - must be taken seriously. Not just now, but in the years to come, as China's rapidly growing industrial base continues to build an asymmetric and systematic dominance over the US. Trump wants to put an end to this situation.

Without a strong industrial base and a national manufacturing sector, the United States will likely not be able to maintain its role as a global hegemon, and decisions will have a series of consequences - for the world, but also for Wall Street".