A global stock sell-off, triggered by concerns over the economic impact of President Donald Trump’s tariffs, showed signs of stabilizing in European markets on Tuesday. This followed a sharp decline in U.S. stocks, with the S&P 500 tumbling nearly 3% on Monday.
Key Market Reactions:
U.S. Stocks: The Dow Jones dropped 2%, while the Nasdaq fell 4%, led by a 15.4% drop in Tesla shares. Other major tech stocks, including Nvidia, Meta, Amazon, and Alphabet, also suffered steep declines.
Asia: Japan’s Nikkei 225 closed down 0.6%, and South Korea’s Kospi fell 1.3%.
Europe: Markets showed resilience, with Germany’s DAX up 0.4% and France’s CAC 40 rising 0.2%, while the UK’s FTSE 100 dipped slightly by 0.1%.
Currency Markets: The U.S. dollar weakened against the euro and the pound.
Investor Concerns Over Tariffs and Economic Growth
Trump’s recent TV interview, where he described the U.S. economy as being in a “period of transition,” has fueled investor uncertainty. Analysts suggest that while initial optimism around Trump’s economic policies focused on tax cuts and deregulation, growing fears of a prolonged trade war are now weighing on sentiment.
Tim Waterer, chief market analyst at KCM Trade, stated:
“Trump is keeping political leaders guessing regarding his next moves on tariffs, but the problem is that he’s also keeping investors guessing—and that’s reflected in the dire market mood.”
Economist Mohamed El-Erian noted that investors underestimated the risk of a trade war, leading to a significant market adjustment as businesses and consumers become cautious about spending.
Tech Sector Under Pressure
Tech stocks bore the brunt of the sell-off, with Tesla’s losses linked to declining new orders in Europe and China, as well as rising competition from Chinese electric vehicle manufacturers.
Lindsay James of Quilter Investors explained:
“There’s an element of Elon Musk’s politics affecting Tesla’s brand, but there are other factors, including slowing demand and increased competition.”
White House Defends Economic Policy
Despite the market turmoil, White House officials remain optimistic. Economic adviser Kevin Hassett told CNBC that the tariffs are already driving manufacturing and jobs back to the U.S., calling for long-term confidence in the economy.
