Global markets headed south on Friday as investors responded to China’s declaration of tax increases on U.S. goods. The Dow Jones Industrial Average fell by 232 points, or 0.6%, by around 3:35 PM CEST, reflecting broader concerns about international trade relations. At the same time, the Nasdaq composite fell 0.1%, a sign of some hesitancy from tech stocks.
With increasing economic tensions, the S&P 500 index, a common benchmark for U.S. stock performance, dropped 0.4% in early trading. These figures underscore a growing panic amongst traders. They are fearful for the possible consequences of the growing tariff war between the world’s two biggest economies.
Currency and Commodity Movements
Unlike the drops witnessed across the stock market, the EUR/USD exchange rate rose by 1.4% on Friday morning US time. One theory has it that euro investors are piling into the currency as a safe haven. This massive change has probably been driven by increasing uncertainty in U.S.-China trade relations. The EUR/GBP cross increased by 0.4%. This appreciation reflects a strengthening of the euro against the British pound.
We know that gold is an effective safe haven during times of market volatility. On Friday mid-morning, it was up more than 0.9%. Gold is off just a bit from its all-time highs. Nonetheless, it remains one of the most popular vehicles for investors seeking a safe haven during stormy weather.
Regional Market Reactions
The reality was just as dire in non-European markets. In Australia, the S&P/ASX 200 fell by 0.8% to end at 7,646.50, reflecting the risk-off mood playing out around the world. That mood was apparent in South Korea’s Kospi index, which fell 0.5% on Friday. These regional downturns are a clear sign that investor confidence is being hurt by the continued and escalating trade war.
U.S. crude oil prices were up just over 0.1%. By Friday afternoon, the price had doggedly climbed up to $60.1 per barrel. In the same manner, Brent crude oil gained 0.1% to $63.4 a barrel. Importantly these higher oil prices, though a signal of lingering concern, indicate some persistent resilience in commodity markets.
Notable Gains Amidst Market Declines
Even with the markets down across the board, a few key stocks were in the green by Friday afternoon. Fresnillo, Rubis and EDP all gained ground on 4 March while the rest of the market melted down. These gains underscore that despite the ongoing bear market, pockets of opportunity continue to exist for sectors focused on growth and innovation.
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