Global Markets Decline Significantly
Global markets have dropped for the third day in a row due to fears of the fallout from Donald Trump’s tariffs. European markets ended the day down with London’s FTSE 100 dropping 4.4% to 7,702, its lowest in over a year. Shares in Paris and Berlin also fell.
Stock Trading in America has been choppy with the major stock market indexes due to a slump in trading. Stocks initially dropped over 4% but recovered slightly on hopes that the US President would push back the date for the tax on imports he’s been planning. After the white house dismissed it as “fake news”, it was back to losing ground. The S&P 500, Nasdaq and Dow Jones started declining again, but less than before.
Tariffs – The New Black Agenda For The West
Economists claim multiple countries could look to negotiate the tariffs with the US.
However, Trump reiterated his position on this saying in front of the reporters Sunday night that “sometimes you have to take medicine to fix something.” However, on Monday, he also went on to say that he would put an additional 50% tax on imports from China unless Beijing drops the countermeasures it announced last week. This on its own would raise the tax placed on Chinese goods entering the United States to a minimum of 104% which is an addition to the 34% tax place on China last week. Along with the 20% placed since January on international trading, there is already a 34% tax incurred along with the newly introduced last week.
Fears Of A Trade War Increase
The fears of a trade between the two countries have risen owing to China enforcing a 34% retaliatory tax on US goods. Analysts caution that if world leaders are unable to come to a consensus with Trump, then the torn policies could be extremely harmful to the economy in a global outlook. “Fundamentally, investors are concerned about a significant impact on corporate profits and a considerable slowdown in economic growth,” remarked AJ Bell’s investment director Russ Mould.
The prices of oil which are still struggling in a consistent fashion dropped over 4%, these price drops are expected to affect everyday consumers. Likewise, Copper which is consider a benchmark of the US economy dropped by over 7% Friday. Expecting to be appreciated, the value of gold which is usually associated with a safe place for investments also decreased marginally.
Predictions of Recession Rise
Goldman Sachs, a leading US investment banking firm, announced on Monday that the chances of a US recession is expected to rise from 35% to 45%. JP Morgan, after China’s retaliatory tariffs last week, expects that the world’s largest economy has a 60% chance of going into a recession. In a letter to shareholders, JP Morgan’s CEO Jamie Dimon said that the tariffs “will likely increase inflation and are causing many to consider a greater probability of a recession.” He further stated, “Whether or not the menu of tariffs causes a recession remains in question, but it will slow down growth.”
KPMG economists in the UK are expecting this will lead to an economic contraction of 0.8% for the year. “There is a strong incentive to seek a negotiated settlement that diminishes the need for tariffs,” KPMG chief economist Yael Selfin added.
