GDANSK/TOKYO, Feb 28 – Global stock markets experienced a sharp downturn on Friday, reaching their lowest levels in six weeks as concerns over impending U.S. tariffs rattled investor confidence. The U.S. dollar remained firm, hovering near multi-week highs, while fears of an escalating trade war reignited worries about the global economic outlook.
Technology stocks bore the brunt of the sell-off, with Nvidia and other major Wall Street giants—often referred to as the “Magnificent Seven”—facing significant losses. This came after investors reacted negatively to Nvidia’s earnings report, despite strong expectations leading up to its release.
Trump’s Tariff Announcement Sparks Market Jitters
Investor sentiment took a hit after President Donald Trump announced that 25% tariffs on imports from Canada and Mexico would take effect on March 4, revising an earlier date of April 2. Additionally, he confirmed that Chinese goods would be subject to an extra 10% duty, further fueling uncertainty. This week, he also floated the possibility of imposing a 25% tariff on imports from the European Union.
The unexpected move forced market participants to reassess their stance on tariff risks. “Markets had become somewhat desensitized to tariff headlines, but this latest round has forced investors to recalibrate their expectations,” said Chris Weston, head of research at Pepperstone.
The ripple effects of these tariff announcements extended beyond stocks, causing risk-sensitive currencies like the Australian dollar to weaken. The U.S. dollar, on the other hand, was poised for its strongest weekly performance since late January.
Stock Markets Reel from Tariff Fears
The European stock market also struggled, with the STOXX 600 slipping 0.3% after a 0.5% decline on Thursday. Technology stocks led the downturn, with the sector’s sub-index falling 1.3%. Despite these losses, the pan-European index remained on track for a 10th consecutive weekly gain, showing resilience amid the broader turbulence.
Global stocks were set for their worst week since mid-December, recording a decline of over 2%. The MSCI World Index touched its lowest point since January 17, reflecting widespread investor anxiety.
In the U.S., stock futures suggested a potential recovery on Wall Street after the previous day’s losses. While the broader market struggled, some investors appeared to be positioning themselves for a rebound.
Bitcoin and Commodities Under Pressure
The stronger dollar weighed on various commodities, including gold. Meanwhile, Bitcoin slipped below $80,000 for the first time in over three months. The cryptocurrency had previously surged on optimism that the Trump administration would be supportive of the digital asset space, but fresh tariff worries dented sentiment.
By late trading, Bitcoin had fallen 4.2% to $80,726, after briefly dipping to $78,273—its lowest level since November 10. Gold prices also declined 0.6%, reaching $2,859 per ounce, marking their lowest level since February 10.
Eyes on Economic Data and Federal Reserve Policy
While the tariff developments drove the market’s decline, investors also had their sights set on key economic data. Recent reports have suggested signs of softness in the U.S. economy, prompting traders to factor in at least two quarter-point interest rate cuts from the Federal Reserve this year. The first of these cuts could potentially come as early as July.
One crucial indicator investors are monitoring is the Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred measure of inflation, set for release later in the day. Additionally, the upcoming U.S. non-farm payrolls report, due next week, will be closely watched for further insights into the labor market.
Asian Markets Join the Decline
Asian markets were not spared from the global sell-off, with Hong Kong’s Hang Seng Index suffering a steep 3.3% decline. Mainland Chinese blue-chip stocks also tumbled, losing 1.9% amid concerns that rising trade tensions could weigh on economic growth.
Analysts believe the latest tariff moves may push China’s policymakers toward further economic stimulus measures. With the National People’s Congress scheduled for next week, investors are keenly anticipating any potential policy responses.
Eurozone Inflation and ECB Policy Outlook
The dollar’s strength also took a toll on the euro, which slipped to its lowest level since mid-February. The euro was last seen trading around $1.03, following a 0.8% drop on Thursday.
Fresh inflation data from the eurozone added to the market’s volatility. Preliminary reports indicated that inflation in France fell below 1% for the first time in four years. Meanwhile, inflation in several key German states also showed signs of cooling.
These inflation trends come ahead of next week’s European Central Bank (ECB) meeting. “The ECB will take note of these figures, as inflation data from major economies typically influence policy decisions more than the final euro area-wide number,” said Jan von Gerich, chief analyst at Nordea.
Market Uncertainty Persists
The combination of rising tariff threats, a strong dollar, and shifting economic data has left markets on edge. While some investors see opportunities in the sell-off, broader concerns about global trade and monetary policy remain key factors shaping the financial landscape.
As the world watches the unfolding economic and political developments, market participants will closely monitor central bank actions, inflation trends, and trade policies in the coming weeks.