Stocks on Wall Street were routed by US President Donald Trump’s Liberation Day tariff regime, which was worse than investors had feared.
The tech-heavy Nasdaq Composite sank 5.2% in afternoon trading with Nvidia, Apple, Tesla and Amazon falling between 5% and 9%, as investors weighed up the threat of Trump’s reordering of international trade to global growth and inflation.
“President Trump’s reciprocal tariff announcement on Liberation Day, that will lift average US tariff rates back to pre-World War I levels, was much worse than anticipated, rocking financial markets,” Bank of New Zealand senior markets strategist Jason Wong said in a note. “In the day ahead, the market will still be trying to work through the implications of Trump’s tariff war.”
The World Trade Organisation estimates the new tariff regime will shrink global trade volumes by 1% this year, and international leaders are assessing their response.
Oil prices tumbled, with Brent crude futures sinking 6.3% to US$70.24 a barrel.
The European Commission’s president, Ursula von der Leyen, vowed to respond to the US import levies, while French President Emmanuel Macron called for European companies to halt investment in the US and China vowed to take countermeasures.
European stock markets sank, with the UK’s FTSE 100 down 1.6% and Germany’s DAX 30 falling 3%.
Buoyant kiwi
The greenback tumbled to its lowest level this year, with the kiwi climbing to 58.03 US cents at 7am in Auckland from 57.36 cents yesterday.
“How China reacts will be a key determinant for the path of the NZ dollar over coming months,” BNZ’s Wong said.
New Zealand’s Reserve Bank is still expected to cut the official cash rate a quarter-point to 3.5% next week.
Australian futures are pointing to a 0.6% decline for the S&P/ASX 200 index, following yesterday’s 0.9% fall. New Zealand’s S&P/NZX 50 index eked out a small gain yesterday.
Investors will continue to focus on the implications of the trade war, with listed companies cautious about giving guidance on the tariffs’ impact too early.
There’s no local data scheduled today, with US employment figures on the radar.
