Global Market Turmoil: US-Canada-Mexico Tariff War Triggers Stock Market, Currency, and Cryptocurrency CrashOn February 3rd, Beijing time, global financial markets experienced severe turmoil. President Trump signed an executive order imposing tariffs of 25% and 10% on goods from Canada, Mexico, and China, respectively
Global Market Turmoil: US-Canada-Mexico Tariff War Triggers Stock Market, Currency, and Cryptocurrency Crash
On February 3rd, Beijing time, global financial markets experienced severe turmoil. President Trump signed an executive order imposing tariffs of 25% and 10% on goods from Canada, Mexico, and China, respectively. This action triggered a global panic sell-off, severely impacting stock markets, currency markets, and the cryptocurrency market.
Stock Markets: Asian markets were broadly weak. Japanese and South Korean markets opened sharply lower. The Nikkei 225 index opened down 1.62% at 38,932.66, falling as much as 2.42% intraday before closing at 38,612.96. The KOSPI index in South Korea fell as much as 3.02%, its largest drop since December 19th; the KOSDAQ index fell 2.3%. Australia's S&P/ASX200 index opened 1.82% lower at 8,377.20. In Hong Kong, the Hang Seng Index closed down 0.87% at 20,048.87; the Hang Seng China Enterprises Index fell 0.92% to 7,313.88; and the Hang Seng Tech Index, after falling as much as 3%, closed down 0.51% at 4,699.47. Performance among tech stocks was mixed, with Kingsoft Cloud rising over 29% at one point, Fourth Paradigm up over 10%, and SMIC up over 5%; while Oriental Selection and JD Health fell over 9%, and Bilibili and Li Auto fell over 8%. US stock index futures fell across the board, with Nasdaq futures down 2.56%, S&P 500 futures down 1.83%, and Dow futures down 1.19%. Huatai Securities analysts believe that DeepSeek may catalyze a revaluation of Hong Kong tech stocks, suggesting investors adjust their portfolios based on changing earnings expectations and increase allocation to internet and technology hardware.
Currency Markets: The US dollar strengthened against most major currencies. The Mexican peso fell to a near three-year low against the dollar, opening at 21.21 pesos per dollar, down 2.5% from its January 31st close and reaching its lowest level since March 8, 2022 a direct response to the US tariff increase. The Australian dollar fell 1.31% against the US dollar to 0.6128, its lowest level since early 2020; the British pound fell 1% against the US dollar to 1.2268. The FTSE China A50 Index futures opened down 2.4%.
Commodities Market: International oil prices surged briefly. March West Texas Intermediate (WTI) crude futures briefly rose almost 4% to $75.18 per barrel, while April Brent crude futures reached a high of $76.5. However, gold prices fell after an initial surge. Spot gold opened higher, reaching $2809.59 per ounce, before falling over 1% to around $2806.60. Spot silver also fell over 1% at one point. Wind Information cited analyst Sybilla Gross, who noted that the trade war exacerbated inflationary pressures, potentially keeping US interest rates high and negatively impacting gold.
Cryptocurrency Market: Cryptocurrencies plunged across the board. Bitcoin fell below $100,000, losing nearly 6% intraday and falling below $92,000. Ethereum fell below $2,300, plummeting 25% intraday. Over 420,000 accounts were liquidated in the 24-hour period.
Impact of the Trade War: Analysts widely believe that the US imposition of tariffs on Canada, Mexico, and China has exacerbated global trade tensions and significantly negatively impacted the outlook for global economic growth. Businesses will face higher import taxes, squeezing profit margins; financial markets will also need to adapt to new trade flow patterns. This will undoubtedly increase global economic uncertainty, decrease market participants' risk appetite, and lead to a flight to safety.
Japanese Stock Market Performance: The Japanese stock market was impacted by global sentiment, with the automotive sector falling across the board. Nissan fell over 10% intraday, Mazda nearly 8%, Honda over 6%, and Toyota over 4%. Meanwhile, the Japanese 10-year government bond yield hit 1.26%, its highest level since 2011, reflecting investor concerns about the economic outlook.
Conclusion: The US imposition of tariffs on Canada, Mexico, and China has been like dropping a bomb into global financial markets, triggering a chain reaction across stock, currency, and cryptocurrency markets. The global economic outlook is clouded, and market participants need to closely monitor developments and cautiously manage potential risks. Future market trends will largely depend on the responses of governments and the ultimate outcome of the trade friction. Continuous market monitoring is crucial.
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