Stocks dived and investors scrambled to the safety of bonds, gold and the yen on Thursday as U.S. President Donald Trump unveiled a bigger-than-expected wall of tariffs around the world's largest economy, upending trade and supply chains.
The high-flying tech sector was pummeled as manufacturing hubs in China faced new tariffs above 30 percent, bringing the total new levy to an eye-watering 54 percent on imports from China.
"The U.S. effective tariff rate on all imports look to be the highest level in over a century," said Citi's global rates trading strategist, Ben Wiltshire.
Nasdaq futures tumbled 4 percent and in after-hours trade some $760 billion was wiped from the market value of Magnificent Seven technology leaders. Apple opens new tab shares, hit hardest as the company makes iPhones in China, were down nearly 7 percent.
S&P 500 futures fell 3.3 percent, FTSE futures fell 1.8 percent, while European futures fell nearly 2 percent.
Gold hit a record high above $3,160 an ounce, and oil, a proxy for global growth, slumped more than 3 percent to put benchmark Brent futures at $72.56 a barrel.
In early trade in Tokyo, the Nikkei opens new tab was down 3.9 percent at an eight-month low, with nearly every index member falling as shippers, banks, insurers and exporters copped a beating.
Benchmark 10-year Treasury yields shot down 14 basis points to a five-month low of 4.04 percent as investors braced for slower U.S. growth, while interest rate futures priced in a higher chance of interest rate cuts in the months ahead.
"The tariffs are so comprehensive and so much larger than we expected," said Jeanette Gerratty, chief economist at wealth advisory Robertson Stephens in the U.S. tech heartland of Menlo Park, California.
"People were talking earlier about whether clarity would boost the market. But now you have clarity, and no one likes what they see."
Trump announced a baseline 10 percent tariff on imports with far higher levies on some trading partners, particularly in Asia.
Besides China's 34 percent tax, Japan got a 24 percent tariff, Vietnam 46 percent and South Korea 25 percent. The European Union was hit with a 20 percent levy.
South Korea's Kospi, opens new tab fell 2 percent. Van Eck's Vietnam ETF opens new tab fell more than 8 percent in after-hours trade. Australian shares opens new tab fell 2 percent.
"The tariffs announced today lead to significant risk to global trade," said Zhiwei Zhang, chief economist at Pinpoint Asset Management in Hong Kong.
(With input from Reuters)
(Cover: A man stands next to an electronic stock quotation board inside a building in Tokyo, Japan, August 2, 2024. /Reuters)