Global stock markets experienced a significant downturn on Monday following the imposition of tariffs by US President Donald Trump on Canada, Mexico, and China. This move has reignited concerns about a potential trade war and its impact on the global economy.
Stock markets in Asia and Europe reacted swiftly to the news, with Japan's Nikkei index closing 2.7% lower and South Korea's KOSPI dropping by 2.5%. Hong Kong's Hang Seng remained relatively stable, while China's markets were closed for the Lunar New Year holiday.
In Europe, the Stoxx Europe 600 index fell by 1.4%, with Germany's DAX and France's CAC both declining by 1.9%. London's FTSE 100 also experienced a 1.3% drop in trading.
Economists and analysts have expressed concerns about the potential impact of these tariffs on global economic growth. Mohit Kumar, an economist at Jefferies, noted that tariffs and counter-tariffs could lead to inflation and weaker growth prospects, which are generally negative for equities.
The US dollar surged to a record high against the Chinese yuan in response to the escalating trade tensions. Market analysts have observed that, for now, the dollar appears to be the primary beneficiary of the situation.
President Trump's decision to impose tariffs on imports from Mexico, Canada, and China has sparked retaliatory measures from these countries. Canada and Mexico have announced their own tariffs, while China has indicated that it will challenge the US move at the World Trade Organization.
Overall, the uncertainty surrounding the trade situation has led to a sense of unease in global financial markets. Investors are closely monitoring developments and assessing the potential implications of these trade actions on various economies.
