Markets Crash After Trump Hits China with Tariffs – Nasdaq down 3.5%
US stock markets crashed late on Friday after President Trump announced fresh 100% tariffs on Chinese goods in retaliation for export limits that China has placed on rare earth minerals. The Dow dropped 1.90% to 45,479, the S&P 2.71% to 6,552, and the Nasdaq plunged 3.56% to 22,204. The dollar dropped, the DXY closing down 0.69% at 98.85, and Treasury yields fell hard; the 2-year down 9.1 basis points to 3.502%, and the 10-year down 10.6 basis points to 4.032%. Oil prices collapsed to 7-month lows, Brent down 3.82% to $62.73 and WTI down 4.24% to $58.90. Gold rallied on the news to push back above $4,000, ultimately closing up 1.02% at $4,017.79 an ounce.
Trade Conflict Adds More Volatility
Trade conflicts and tariffs raised their heads again in a big way on Friday to rock markets and send US stock markets and the dollar spiraling. The market had been buoyant again through most of last week despite the ongoing US government shutdown, and most investors were looking at this year’s trade conflicts as largely being settled until President Trump fired up on Friday, announcing additional 100% tariffs after China expanded export controls on rare earth mineral exports on Thursday. Traders are now anticipating more volatility on updates on the situation in the coming days, with the focus on whether tariffs will be implemented and whether a scheduled meeting between Trump and Xi Jinping will take place in a few weeks’ time.
Quiet Calendar and Thin Markets to Kick Off Trading Week
It is a very quiet macroeconomic calendar today to kick off the trading week, and with major centers on holiday, traders are expecting thin liquidity conditions. The Asian session is set to start on the back foot as investors react to the weekend’s escalation in the trade conflict between the US and China. New loans data is due out of China at some point (exp. 1,460 bio), which should see some reaction in local markets, although the trade updates are likely to be more impactful. There is little on the calendar to move markets in the London session, and with both US and Canadian markets closed for the day, traders are wary that we could see exacerbated moves in the latter session, with the likelihood high that we will get more geopolitical updates as the day progresses.
