Wall Street on edge: Will Friday bring relief or more chaos as COVID-style panic grips global stock markets once again?

Financial markets globally were shaken on Thursday after US president Donald Trump's imposition of a series of new tariffs that sent global economies into shock, as per a report. Investors now await to see if Friday will bring some relief or increased unrest.

Global Reactions to New Tariffs

The numbers were bleak. The S&P 500 dropped 4.8%, its worst day since the initial stages of the pandemic in 2020, according to AP. The Dow Jones Industrial Average fell by 1,679 points or 4%, as per AP. The Nasdaq composite fell by 6%, as per the report. The sell-off did not stop with US markets, European and Asian stocks fell too, reported AP. Europe's major indexes such as France's CAC 40 slipped 3.3%, and Germany’s DAX dropped, according to the report. Even Japan’s Nikkei 225 dropped 2.8%, as per AP. Hong Kong’s Hang Seng fell 1.5% and South Korea’s Kospi slipped 0.8%, reported AP.

The Trigger for Panic

The cause of the panic was Trump's announcement of new tariffs, including a 10% minimum on imports, with even more for some nations like China and the European Union, reported AP. While the market had been expecting some sort of tariff move, Trump surprised the markets worldwide with “the worst case scenario for tariffs,” said Mary Ann Bartels, chief investment officer at Sanctuary Wealth, reported AP.

Economic Slowdown

As per UBS, the tariffs could rival levels not witnessed in almost a century, could knock down the United States economic growth by 2 percentage points this year and raise inflation close to 5%, reported AP.

Thornburg Investment Management's portfolio manager Sean Sun claimed, “Markets may actually be underreacting, especially if these rates turn out to be final, given the potential knock-on effects to global consumption and trade,” quoted AP.

Donald Trump's View on Markets

However, the US president said, “The markets are going to boom, the stock is going to boom and the country is going to boom,” as quoted in the report.

FAQs

Are investors overreacting to the tariffs?
Some experts believe markets might be underreacting, as the full impact of the tariffs on global trade and consumption is yet to be seen, reported AP.

Why are the tariffs imposed?
Donald Trump imposed the tariffs to reduce trade imbalances and encourage manufacturing in the US.