NEW YORK, 12 April 2025 (BSS/AFP) – Global financial markets endured another tumultuous session on Friday as US President Donald Trump’s erratic tariff manoeuvres roiled investor confidence, sending the dollar plunging, bonds tumbling, and stock indices into sharp swings across the globe.
Uncertainty Reigns as Tariff War Escalates
Investors reacted sharply to a week of mixed signals from Washington. After an initial announcement of blanket tariffs caused a major sell-off, President Trump triggered a brief but powerful rally by pausing tariffs on several allied nations. However, the decision to impose a punitive 145% tariff on Chinese goods reignited fears of an entrenched trade war.
China retaliated on Friday, unveiling a 125% tariff on US products, although Beijing signalled it might refrain from further escalation for the time being.
Market Response: A Week of Whiplash
| Market Index | % Change (Friday Close) | Closing Value |
|---|---|---|
| Dow Jones (New York) | ▲ 1.6% | 40,212.71 |
| S&P 500 (New York) | ▲ 1.8% | 5,363.36 |
| Nasdaq (New York) | ▲ 2.1% | 16,724.46 |
| FTSE 100 (London) | ▲ 0.6% | 7,964.18 |
| CAC 40 (Paris) | ▼ 0.3% | 7,104.80 |
| DAX (Frankfurt) | ▼ 0.9% | 20,374.10 |
| Nikkei 225 (Tokyo) | ▼ 3.0% | 33,585.58 |
| Hang Seng (Hong Kong) | ▲ 1.1% | 20,914.69 |
| Shanghai Composite | ▲ 0.5% | 3,238.23 |
Despite early losses on Wall Street, sentiment improved during the day, driven by hopes of a shift from escalation to negotiation. “There’s some optimism we might now transition from confrontation to compromise,” said Angelo Kourkafas of Edward Jones.
However, in Europe, markets ended mixed. Frankfurt and Paris closed lower, rattled by the escalation in US-China tensions. London bucked the trend, climbing 0.6% on the back of surprisingly strong UK economic growth figures for February.
Currency Markets: Dollar Drops as Investors Seek Safety
The dollar, traditionally considered a safe-haven currency, fell to its weakest level against the euro in over three years, reflecting growing unease over US economic policy. Though it pared some losses by the end of the day, fears lingered that Washington’s trade stance could lead to prolonged instability.
| Exchange Rate Movements | Change |
|---|---|
| Euro / Dollar | ▲ to $1.1359 (from $1.1201) |
| Pound / Dollar | ▲ to $1.3088 (from $1.2970) |
| Dollar / Yen | ▼ to ¥143.49 (from ¥142.46) |
| Euro / Pound | ▲ to 86.80p (from 86.36p) |
In the bond market, the yield on the 10-year US Treasury jumped above 4.5%, a sign that investors were offloading government debt at pace.
John Higgins, chief economist at Capital Economics, warned that markets were jittery about a possible Chinese sell-off of US Treasuries, a move that could raise US borrowing costs and strengthen the Chinese yuan.
Gold Soars to Record, Oil Prices Rise
With nerves fraying, gold surged to another record high, as investors piled into the precious metal in search of safety. Crude oil prices also advanced, buoyed by US pressure on Iran, a major oil exporter.
| Commodities | Price | % Change |
|---|---|---|
| Gold | Record High | — |
| Brent Crude | $64.76/barrel | ▲ 2.3% |
| West Texas Intermediate (WTI) | $61.50/barrel | ▲ 2.4% |
“Uncertainty around the economic and earnings impact of these tariffs could keep markets volatile for weeks, if not months,” cautioned Russ Mould, investment director at AJ Bell.
Asia: Volatility Persists
Asian markets mirrored global instability. The Tokyo Stock Exchange plunged 3% after a stunning 9% gain the day before, highlighting the region’s vulnerability to trade war developments. Sydney and Seoul also fell, while Hong Kong and Shanghai advanced modestly on hopes of fresh stimulus from Beijing.
Notably, markets in Taipei and Ho Chi Minh City gained, as their leaders announced forthcoming trade talks with President Trump, offering a glimmer of diplomatic progress in a tense geopolitical environment.
