Asian Pacific stock indices sold off sharply as investors digested the potential impact of Trump’s tariffs. Japan bore the brunt of the selling pressure, with the Nikkei plunging close to 3%, dragged lower by auto and industrial stocks. China’s Shanghai Composite fared better, slipping only 0.2%. But Hong Kong’s Hang Seng lost 1.6%. 

Trump’s tariff announcement means concerns remain about Beijing’s response to the move. The overarching sentiment remains cautious, with investors hesitant to intervene ahead of potential countermeasures from China and the EU.

European stock indices fell sharply this morning, reflecting heightened concerns over the costs of global trade. The German DAX and French CAC were both down 1.4% at the time of writing. The Euro Stoxx 50 fell 1.8%, while the UK’s FTSE 100 lost a more modest 0.7% as the UK got away with a relatively modest 10% tariff on exports to the US.

The currency markets saw a sharp shift in sentiment, with the US dollar coming under heavy selling pressure. The Japanese yen emerged as the primary beneficiary, while the Swiss franc was also in demand. Both rallied as investors sought safety in traditional safe-haven assets.

Both the British pound and euro made large gains against the US dollar. Sterling surged above 1.3100 to hit its highest level in six months. Meanwhile, the euro pushed up towards 1.1000, trading at levels last seen in early October. FX traders are watching closely for any policy responses from global central banks.

Gold continued its meteoric rise, capitalising on the market turmoil. Prices soared to another fresh record, briefly touching $3,168 before pulling back slightly. Investors piled into the metal as a hedge against uncertainty. The move has reinforced golds role as the go-to safe-haven asset.

Silver, however, failed to keep pace, sliding lower as investors rotated into gold. The divergence between the two metals suggests a more selective flight to safety.

Crude oil prices fell on the risk-off mood. Yesterday’s sharp build in US inventory levels added to downside pressure, undercutting recent bullish momentum. Natural gas also edged lower and briefly dipped below the 4.00 mark.

Cryptocurrency markets were not spared from the fallout. Bitcoin and Ether both came under heavy selling pressure, with prices sliding as risk assets sold off across the board. The sector remains highly sensitive to macro developments, and traders will watch for further downside moves if global risk appetite deteriorates.

The VIX—Wall Street’s “fear gauge”—spiked to 24 at its peak before settling just below 23.5. The elevated volatility suggests that traders are bracing for more turbulence ahead, with market sentiment shifting rapidly.

European leaders wasted no time in responding to Trump’s latest trade move. Germany’s finance minister warned that it would be “naïve” to assume the situation would improve independently, calling for a strong EU response. France took an even stronger stance, declaring outright that a “trade war” is now underway.

Traders are now pricing in the possibility of further rate cuts from the European Central Bank as policymakers look to shield the region’s economy from the fallout.

• Global services PMI – Fresh data will offer insight into economic activity across major economies.
• US Jobless Claims – A key labour market indicator that could influence sentiment.
• OPEC meeting – Markets will closely watch for any signals regarding supply adjustments.
• Fed commentary – Traders will be on high alert for any central bank remarks regarding the tariff situation and potential policy responses.

Trump has thrown global markets into disarray, proving sceptics wrong by following through on his tariff threats. What was once dismissed as mere rhetoric has now materialised into a full-blown trade conflict.

For investors, the challenge now is navigating the uncertainty. With retaliatory measures expected from China and the EU, risk assets could remain under pressure. The stock market, once a stronghold under Trump, now faces a serious test.

Meanwhile, reports are surfacing that Elon Musk may be preparing to step down from his advisory role in Trump’s government. The speculation follows increasing tensions between the administration and business leaders over trade policy.

One thing is certain—things are getting increasingly unpredictable, and markets are in for a volatile ride.