Nikkei Sinks 6% as Tariffs Rattle Global Markets

Japan’s Nikkei fell 6% and Chinese blue chips dropped nearly 7% as markets reacted to President Trump’s escalating tariff measures. Taiwan plunged almost 10% after a holiday break, triggering short-selling curbs and circuit breakers across several Asian exchanges. JPMorgan now sees a 60% chance of a US recession, with Fed rate cuts likely beginning in June despite inflation concerns tied to rising import costs.

Equities

The FTSE 100 fell nearly 5% on Friday, marking its worst single-day drop since March 2020. The index closed at a three-month low as investors reacted to growing fears of a global recession triggered by President Trump’s sweeping new tariffs and China’s swift retaliation. The midcap FTSE 250 index fell 4.4%, reaching a 16-month low. All but one FTSE 100 stock declined on the day.

Shell dropped nearly 7%, while BP lost 7.4% following news that its Chair, Helge Lund, intends to step down “likely during 2026.” The announcement comes amid pressure from activist investor Elliott, which has been pushing for further changes at the company. In the mining sector, shares in precious and industrial metals producers dropped 8.5% and 7.5%, respectively. Oil and gas stocks declined 7.1%, tracking a near 8% fall in crude prices. Aerospace and defence shares were down 9%. Bank stocks also lost ground, falling 6.3% to a three-month low.

In the US, all three major indices recorded their largest two-day falls since the early months of the pandemic in March 2020. The S&P 500 fell 5.97% on Friday to close at 5,074, bringing its two-day loss to 10.5%. The Nasdaq dropped 5.82% to 15,587 and is now officially in a bear market, having declined more than 20% from its December peak.

The Dow lost 5.5% on Friday and is down 9.3% over two days, confirming it is in a correction. Trading volumes hit a record 26.79 billion shares, as the sell-off deepened following Trump’s tariff announcement and China's retaliatory move to impose 34% tariffs on all US goods from April 10.

The S&P Banks index fell 7.3% as lower bond yields and rate cut expectations hit the sector’s profitability outlook. The 10-year Treasury yield dropped below 4% amid safe-haven buying. The energy sector led losses for a second straight day, down 8.7%. Apple shares fell 7.3%, while JD.com, Alibaba, and Baidu—three US-listed Chinese tech firms—each declined more than 7.7%. The semiconductor index dropped 7.6%, following a 9.9% fall the previous day, as chipmakers were hit by the threat of tariffs on both sides of their supply chains.

Forex & Commodities

The yen rose 0.63% to 145.92 against the US dollar, building on a 2% gain from last week, as investors moved into safe-haven currencies. The Swiss franc gained more than 0.8% to 0.8531 per dollar, adding to last week’s 2.3% advance. The Australian dollar fell to a five-year low of $0.6014 and was last down 0.5%, while the New Zealand dollar slipped 0.43% to $0.5572. The dollar index was last at 102.64 after falling 1% last week. Sterling edged down 0.1% to $1.28925 and the euro rose 0.18% to $1.0985. The offshore yuan weakened more than 0.3% to 7.3205 per dollar, its lowest in over two months, despite the Chinese central bank continuing to set a stronger daily midpoint.

Gold dropped to a three-and-a-half-week low of $3,034.02 an ounce, with losses of over 1% earlier in the session. The price fell more than 3% on Friday as traders sold bullion to cover losses elsewhere. US gold futures were up 0.5% at $3,051.00. Spot silver rose 2% to $30.13 an ounce, while platinum and palladium were each up around 1%.

Oil prices extended last week’s sharp losses. Brent crude dropped 2.15% to $64.17 a barrel and WTI was down 2.18% to $60.64. Both benchmarks fell over 10% last week and reached their lowest levels since April 2021. OPEC+ confirmed it would raise output by 411,000 barrels per day from May.

Markets now price in a 55% chance of a US Federal Reserve rate cut in May, with futures implying over 100 basis points of easing by year-end. Fed Chair Jerome Powell said on Friday that the economic impact of the new tariffs was “larger than expected” and could result in both higher inflation and slower growth.