United States
US equity markets closed sharply lower on Friday as tensions between the US and China intensified. The declines followed a series of sweeping measures announced by China in response to US tariffs, including a 34% tariff on all US imports and export restrictions on a range of rare earth elements—materials critical to advanced US manufacturing and technology sectors. China produces about 90% of the world’s rare earths.
Markets were not soothed following a speech from Federal Reserve Chairman Jerome Powell, who acknowledged that President Trump’s newly announced tariffs were “significantly larger than expected.” Powell warned that these measures would likely increase inflation while dampening growth. He added that given the “highly uncertain outlook,” the Fed would remain patient, noting that “it is too soon to say what will be the appropriate path for monetary policy.”
At the close, the Dow Jones Industrial Average fell 2,231 points, or 5.5%, to finish at 38,314. The Nasdaq Composite dropped 962 points, or 5.82%, to 15,587, and the S&P 500 declined 322 points, or 5.97%, to close at 5,074. All 11 sectors of the S&P 500 ended in negative territory, with only 14 of the 500 constituents posting gains. The Energy sector led the losses, falling 8.70%, followed by Financials, down 7.39%.
Companies with exposure to Chinese supply chains were particularly hard hit. Tesla tumbled 10.42% to USD 239.43, and Apple dropped 7.29% (USD 14.81) to USD 188.38. China accounts for around 80% of Apple’s production and 90% of iPhone assembly. Aerospace and defence names which require access to rare earths also fell sharply, with Boeing down 9.4% to USD 136.59 and Lockheed Martin off 4.98%.
Energy stocks were decimated as oil prices plunged. ExxonMobil dropped 7.20% to USD 104.34, while ConocoPhillips slumped 9.41%. Copper miner Freeport-McMoRan fell 13.01%, in line with a more than 6% drop in copper prices due to heightened concerns over slowing global growth.
Semiconductor stocks also struggled, reflecting their significant exposure to China. Nvidia fell 7.36%, while Marvell Technology plummeted 11.16%. Financials suffered broad-based losses, with both banks and insurers contributing to the sector’s 7.39% decline. The list of stocks falling more than 6% was extensive across sectors.
Economic data took a backseat to the market turmoil. The March non-farm payrolls report showed an increase of 228,000 jobs—well ahead of the 140,000 expected. However, the unemployment rate rose to 4.2% as labour force participation increased, signalling a more complex picture of labour market dynamics. Analysts moved their growth predictions lower.
Bond yields fell as investors sought safety. The 10-year Treasury yield dropped 5 basis points to 3.99%, and the 2-year yield fell to 3.65%. The US dollar strengthened, rising 0.98% on the Bloomberg Dollar Index.
Volatility surged, with the VIX ending the week at 45.31, up 15 percentage points and marking its highest level since August 2024. The week ahead promises continued turbulence, with some analysts declaring that the “bull market is dead,” amid growing fears the US will remain entrenched in its position, escalating the trade war further. Major banks JP Morgan and Wells Fargo are set to announce results on Friday with questions about their perception of increasing credit risks and slowing of deal flow as companies delay strategic decisions in the face of the economic uncertainty.
Europe
The Euro Stoxx 600 plunged 5.12% on Friday to close at 496.33, losing 26.79 points in its worst session in years. All sectors closed in negative territory, with Energy and Financials leading the declines. In the UK, the FTSE 100 dropped 4.95% to 8,054.98, marking its steepest single day fall since March 2020.
Risk aversion drove broad-based selling across European equities. Energy stocks were particularly hard hit—Shell fell 6.97%, while BP declined 7.43%. BP also announced that its Chairman would step down next year, as the company contends with pressure from activist investor Elliott Management, which holds a 5% stake and is calling for strategic changes.
Automakers also came under pressure. Mercedes-Benz declined 5.2%, BMW lost 4.3%, and Stellantis fell 4.2% after announcing a two-week production halt at its plant in Mexico in response to the newly imposed US tariff regime.
Retail stocks, especially luxury goods makers reliant on global trade, also declined. Kering, the owner of Gucci, dropped 3.78%, while LVMH slid 2.38%.
Technology and pharmaceutical shares were weaker as well, following comments from US President Trump suggesting that additional levies on chipmakers and drug manufacturers could be introduced. Roche fell 6%, and AstraZeneca dropped 5.1%.
Banks significantly underperformed, with the Eurozone banking index down 8.4%. HSBC fell 5.6%, and Deutsche Bank plunged 9.8% after CEO Christian Sewing warned that a recession in Germany was increasingly likely considering rising US trade tensions.
Bond markets rallied on safe-haven flows, as investors priced in further interest rate cuts and slashed growth forecasts for both the Eurozone and the UK. German 10-year bund yields fell 8 basis points to 2.57%, while 2-year bund yields dropped 12 basis points to 1.82%. UK 10-year gilt yields declined 7 basis points to 4.45%.
Currency markets reflected the risk-off sentiment. The euro weakened by 0.87% to USD 1.0956, while the British pound fell 1.6% to USD 1.2887.
European leaders remained cautious in their public remarks, weighing potential responses to the US tariffs while assessing their strategic positioning amid escalating trade tensions.
Australia
ASX 200 futures mirrored the sharp sell-off on Wall Street, plunging 331 points—or 4.28%—by the close early Saturday morning, Australian time. If the local market opens at this level today, the index will retreat to levels last seen in January 2024.
BHP’s New York-listed shares were trading at AUD 34.87, marking a 5.3% drop from Friday’s Australian close. The Australian dollar also weakened significantly, with the AUD/USD falling 4.5% to close at 0.6040.
On Friday, the ASX 200 shed 192 points, or 2.44%, to finish at 7,667.80. Every sector ended in the red except Consumer Staples, which gained 2.41%. The worst-performing sectors were Energy and Technology, down 8% and 6.42%, respectively.
The sell-off was triggered by the US administration’s announcement of new tariffs, stoking fears of an escalating trade war and raising the likelihood of a global recession. In response, bond yields fell as markets priced in a return to aggressive interest rate cuts by major central banks, including the RBA. On Friday, 10-year Australian government bond yields closed at 4.21%, down 5 basis points, while 2-year yields dropped 13 basis points to 3.39%. An increasing number of bank economists are now forecasting a rate cut at the RBA’s May meeting.
The Energy sector saw the most severe losses. Woodside shares plunged 9.12% to AUD 20.42, a fall of AUD 2.05, while Santos dropped 9.44% to AUD 5.95. In contrast, Materials stocks were more resilient, supported by stable iron ore prices during Asian trading. BHP dipped just 0.51% to AUD 36.82, while Rio Tinto rose 0.68% to AUD 112.70. At Rio’s annual general meeting, shareholders voted on a resolution calling for an independent review of the company’s corporate structure. The board opposed the resolution, with results to be announced after the AGM in Australia on May 1. In the materials sector Lynas rare earths was higher by 24c (+3.4%) to $7.31.
Technology stocks came under heavy pressure. WiseTech fell 8.45% to AUD 74.83, and Technology One declined 9.37% to AUD 25.35. Broader sector weakness was evident across most names.
In the Financials sector, which weighed heavily on the broader market, CBA outperformed with a relatively modest 1.52% decline to AUD 154.00. ANZ fell 3.66% to AUD 28.18, while Macquarie Group slumped 9.03% to AUD 174.00.
Consumer Staples were the standout, benefiting from haven buying. Woolworths climbed 3.39% to AUD 31.13, while Coles surged 4.14% to AUD 21.13—an 84-cent gain. A shopper survey by UBS showed that Coles has overtaken Woolworths as the supermarket of choice for the first time, leading by one percentage point.
With the magnitude of overseas declines, further sharp losses are anticipated today—particularly in the same sectors hit hardest on Friday—as investors seek to reduce risk exposure and margin selling intensifies.
Commodities
Oil prices fell to three-year lows as investors braced for slowing global economic growth amid rising trade tensions. China announced retaliatory tariffs of 34% on all US goods, effective from April 10. This move sent West Texas Intermediate (WTI) crude tumbling 7.41%, down USD 4.96 to USD 61.99. Brent crude also fell sharply, losing 6.50% or USD 4.56 to close at USD 65.58.
The decline followed comments from OPEC+ indicating that supply increases in May would exceed market expectations. Although oil, gas, and refined fuel imports were exempt from the latest round of US tariffs, the broader implications of weaker demand due to slower growth weighed heavily on energy markets.
Copper prices also plunged, falling 6.25% or USD 586 to USD 8,780 per tonne on the London Metal Exchange. This marked the largest single-day decline since the onset of the COVID-19 pandemic in March 2020 and the steepest two-day loss since 2011. Analysts warned of further downside, citing deteriorating global growth prospects.
Iron ore, which had remained relatively stable during Asian trading, dropped significantly following China’s announcement. In addition to the tariff hike, Beijing introduced new restrictions on rare earth exports, imposed controls on two dozen US companies, and launched an investigation into US chemical giant DuPont. Iron ore ended the day in New York at USD 98.00 per tonne, down USD 2.94 or 2.9%—returning to levels last seen in January.
Precious metals also declined, as investors sold holdings to cover losses in other risk assets. Gold fell 2.47%, shedding USD 77.10 to close at USD 3,038.24, while silver slumped 7.13% to USD 29.59. Platinum was also lower, down 3.6%.
Bitcoin was trading at US$78,807 at the close of Sunday trading as it fell 4.3% from Thursday’s prices. A drop of over US$3,500 on Sunday afternoon took the cryptocurrency through US$80,000 and stop loss selling ensued. Ethereum suffered a greater decline dripping 12.5%. Traders suggested the dramatic fall came as markets in Asia open on Monday and expectations of further declines in risk assets would occur as there were no concessions from US president Trump on his tariff stance over the weekend.
Economic Calendar
AU:
- ANZ-Indeed Job Advertisements (Mar) – 11:30am
EU:
- Retail Sales (Feb) – 7:00pm
US:
- Consumer Credit (Feb) – 5:00am
This article was written by Paul Darwell, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
