Markets Shaken As Trump’s Tariff Turbulence Sparks Global Growth Fears And Corporate Retrenchment
GerikSummary:
Global markets wavered and oil prices declined as mounting concerns over U.S. tariffs under President Trump triggered fears of economic stagnation, weakened consumer confidence, and growing corporate caution....
Global Markets Lose Momentum Amid Tariff-Induced Economic Anxiety
Markets opened the day on a shaky footing, as the weight of U.S. President Donald Trump’s tariff policy continued to ripple across global financial and commodity markets. Despite initial hopes for easing tensions after the administration announced partial relief on auto tariffs, sentiment soured due to worsening macroeconomic signals and a lack of clarity on trade negotiations.
Brent crude dropped 0.28% to $64.07 per barrel, and U.S. WTI crude fell 0.35% to $60.21, extending sharp losses from the previous session. U.S. stock futures also lost traction, with Nasdaq and S&P 500 futures falling 0.6% and 0.4% respectively. Meanwhile, Treasury yields declined to multi-week lows as investors shifted expectations toward deeper rate cuts from the Federal Reserve by year-end.
Market Sentiment Deteriorates Despite Policy Hints
While Commerce Secretary Howard Lutnick claimed to have secured a foreign trade deal—awaiting approval from the partner country—the lack of specifics failed to inspire confidence. Traders remain skeptical of meaningful progress amid what many view as a chaotic and politically motivated trade agenda.
Investor uncertainty was compounded by fresh economic data showing a record U.S. goods trade deficit and the sharpest drop in consumer confidence since the early pandemic period. As signs of economic fragility mount, analysts are increasingly pricing in a scenario of prolonged stagnation. Julius Baer’s chief economist, David Kohl, estimated a 50% chance of recessionary conditions emerging in the coming months, attributing the risk directly to erratic and restrictive trade policy.
Corporate Strategy Under Pressure From Policy Instability
Multinational corporations are now openly struggling with the implications of unpredictable tariffs. UPS announced a sweeping plan to cut 20,000 jobs, while General Motors pulled its earnings forecast and delayed its investor call. Many firms are refraining from long-term planning, citing poor visibility and the risk of contracting demand.
M&G Investments’ CIO Fabiana Fedeli described the current landscape as one where businesses are increasingly unwilling to sign contracts or invest in future growth, describing the situation as “a very slippery slope.” The result is a widespread freeze on capital spending that could deepen the economic slowdown.
Oil And Commodities Reflect Demand Fears
The energy market mirrored these concerns. Crude oil’s back-to-back losses reflected not only the drag from weak economic indicators but also from reduced corporate fuel consumption forecasts. The demand outlook has darkened as fears of a synchronized global slowdown—led by the U.S. and China—overshadow any near-term supply constraints.
Spot gold held steady at $3,316.11 an ounce, indicating modest safe-haven demand amid growing economic uncertainty and market volatility.
Bond Markets Signal Fed Will Be Forced To Act
With market confidence waning, traders increased bets on rate cuts from the Federal Reserve. The futures market now prices in 97 basis points of cuts by December, up from 80 basis points last week. This pivot drove the two-year U.S. Treasury yield to a three-week low of 3.64%, while the 10-year yield dropped to 4.158%, its lowest since early April.
Even with inflation risks stemming from tariffs, the growing drag on GDP and consumer sentiment has pushed expectations toward more aggressive monetary easing—especially if economic data continues to deteriorate.
China Data Adds To Gloomy Global Outlook
Adding another layer to the bearish global sentiment, China reported a contraction in factory activity for April, reversing two months of modest recovery. Societe Generale revised its 2025–2026 GDP growth forecasts for China down to 4%, expecting further stimulus equal to 2.5% of GDP and warning of prolonged deflationary pressure.
The Chinese stock market responded tepidly, with the CSI300 edging up 0.12% and the Hang Seng Index dipping 0.08%, mirroring a global market that is neither in freefall nor in recovery—stuck instead in a state of tense stagnation.
Source: Reuters
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