Major global stock indices, including the Dow Jones, S&P 500, Nasdaq, and Japan’s Nikkei, all recorded declines of at least 2%, while Tesla shares experienced a staggering 15% drop, marking their worst single-day performance since September 2020.
Global economic markets have been in turmoil for a long time, with global stock indexes seeing sharp declines. The main reason for the slowdown appears to be the growing problems of the trade war that could derail the US economic recovery and possibly lead to a recession. While the White House has downplayed concerns that former President Donald Trump’s alternative policies are causing long-term economic instability, investors remain wary of the uncertain global trade landscape.
On Monday, major US stock indexes saw heavy losses, with the S&P 500 down 2.7%, the Dow Jones Industrial Average down 2%, and the Nasdaq Composite – heavily weighted with technology stocks – down 4%. The biggest declines were seen in the conglomerate of major technology companies commonly referred to as the “Fantastic Seven”, which include Alphabet (Google’s parent company), Amazon, Apple, Microsoft, Meta (formerly Facebook), Nvidia and Tesla. Of these, Tesla saw the biggest decline, with its stock falling 15%, its worst one-day performance since September 2020.
The market downturn in the US was felt across global financial markets, leading to a decline in Asian markets on Tuesday. Japan’s Nikkei index and Taiwan’s stock market both fell about 3%, reaching their lowest levels since September. The MSCI Asia-Pacific index excluding Japan fell more than 1%. Chinese stocks, which had performed well at some point this year, also failed to withstand the bad sentiment. China’s blue-chip index fell about 1%, while Hong Kong’s Master Seng Index fell 1.5%.
Futures contracts for major indices showed that markets in Ecuador were also set for losses. Futures for Germany’s DAX fell 0.8%, while futures for the Euro Stoxx 50, which tracks the eurozone’s largest conglomerates, fell 0.9%. The indicators suggest that the global market downturn is likely to continue as investor confidence erodes.
The broader sell-off in stock markets followed shortly after Trump dodged questions about the possibility of a recession. Asked about the possibility of an economic downturn, Trump replied, “There is a transition period, because what we are doing could be very big … it takes some time, but I think it should be extraordinary for us.” His response failed to reassure traders, who remained focused on the broader financial fallout from the trade dispute.
National Monetary Council chief Kevin Hassett sought to ease concerns in a CNBC interview on Monday. He expressed confidence that any uncertainty over Trump’s trade rules would be resolved by early April, and declared that the rules were benefiting the U.S. economy. According to Hassett, the administration’s trade approach has shifted to encouraging companies to move production back to America. He cited employment data showing that the U.S. manufacturing sector added 10,000 jobs in February. However, put into context, the increase represents only a 0.08% increase in total manufacturing employment, which is about 12.7 million jobs.
Despite the market volatility, Hassett remained positive about the economic outlook, saying, “There are many reasons to be very bullish going forward.” He reiterated the Trump administration’s commitment to imposing steep tax cuts, pursuing deregulation, and boosting productivity through advances in artificial intelligence and other technologies.
Stephen Moore, a former Trump adviser and a visiting fellow at the History Foundation, also sought to allay fears of a financial meltdown. During an interview with Bloomberg Television in Washington, D.C., Moore defended Trump’s economic policies, stressing confidence in the administration’s vision. However, many economists and economic analysts have expressed concern about the long-term consequences of the ongoing exchange rate disputes on the domestic and global economies.
The Trump administration has maintained that any economic uncertainty will be short-lived and that its policies will ultimately strengthen the U.S. economy. However, financial markets have reacted with caution. As U.S. stock prices have continued to fall over the past week, Trump and his administration officials have appeared frequently in media interviews to reassure the public and advocate for their economic agenda.
