Global markets today: There is chaos across global financial markets. US President Donald Trump’s reciprocal tariffs have spooked investors, prompting them to pull their money out of various asset classes.
That reciprocal tariffs were coming was expected. What’s creating panic among investors is the prospect of a trade war that could disrupt global economic growth and reshape international trade practices.
The Trump tariff saga
On April 2, Trump jolted the world by announcing reciprocal tariffs on more than 180 countries, claiming the day marks the rebirth of American industry and the start of a “golden age.”
He also announced a 10 per cent tariff will be applied to all imports from all countries, except those complying with the US-Mexico-Canada Agreement (USMCA).
He announced a 26 per cent reciprocal tariff on India, which will take effect April 9, 2025.
“India very, very tough. The Prime Minister just left and is a great friend of mine, but you are not treating us right. They charge us 52 per cent, and we charge them almost nothing…” Donald Trump said.
A 26 per cent reciprocal tariff on India is lower than a 34 per cent tariff on China.
Global market rout
Global financial markets melted down. As Reuters reported, the S&P 500 lodged its biggest weekly drop since the COVID-led selloff in March 2020, and the Nasdaq Composite on Friday ended down more than 20 per cent from its December record high. The Dow Jones Industrial Average finished the week down well over 10 per cent from its December record high.
The sharp plunge in Wall Street indices came after China announced an additional 34 per cent tariff on all goods imported from the US as a counter-move. The US stock market was wiped out over $5 trillion due to trade war fears.
Gold also witnessed selling. Gold COMEX June contracts crashed over 2 per cent on Friday.
The benchmark US 10-year bond yields fell 0.92 per cent to 3.99 per cent after falling to a six-month low of 3.86 per cent on Friday, marking its biggest weekly drop since July 2024.
Indian stocks too felt the heat of the global rout, although the magnitude of the pain was relatively less severe. The benchmark Nifty 50 fell 1.5 per cent on Friday, taking its cumulative decline to 1.8 per cent since Trump’s tariff announcements.
The resilience of the Indian stock market is attributed to the prevailing belief that the Indian economy will not be significantly impacted by the tariff blow, given India’s relatively small trade surplus with the US.
According to the India Brand Equity Foundation (IBEF), India recorded a trade surplus of $36.8 billion with the US in FY24. Indian exports to the US stood at $77.5 billion, while imports from the US were valued at $40.7 billion during the same period.
Moreover, the impact of Trump’s tariffs could be limited to a few sectors, such as textiles, pharmaceuticals, IT, electronic components, agricultural products and automobiles.
There are also expectations that the Indian administration will engage with the US authorities to explore options for reducing tariffs.
What should investors do amid Trump’s tariff shock?
The global stock market is experiencing heightened volatility. Experts advise investors to maintain caution and wait for stability before making fresh moves.
According to them, in the short term, it would be prudent to focus on domestic consumption-driven themes while selectively considering pharma within externally-linked sectors.
There is still much uncertainty over how the tariff saga will unfold and whether major US trade partners will announce further countermeasures. In the context of India, it is important to wait and watch how the ongoing India–US bilateral trade negotiations play out.
“The tariffs imposed on India are relatively lower compared to those on other Asian economies, offering a degree of relief. Any constructive developments arising from the ongoing India–US bilateral trade negotiations could serve as a supportive catalyst for the market,” Vinod Nair, the head of research at Geojit Investments Limited, observed.
Some experts expect a time-wise correction in the Indian stock market and advise investors to focus on stock selections.
“We anticipate a time-wise correction in the Nifty index. Traders are advised to stay focused on stock selection and adopt a hedged strategy until further clarity emerges,” said Ajit Mishra, SVP of research at Religare Broking.
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Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.
