Global Markets in Turmoil Amid US Tariff Threats

Wall Street experienced a volatile end to the week after the White House dismissed reports suggesting President Trump would postpone tariffs by a month. Instead, officials confirmed his plans to implement tariffs on Mexico, Canada, and China, causing equities to surrender earlier gains. As a result, the S&P 500 declined by 0.50%, the Dow shed 310 points, and the Nasdaq 100 inched lower. Meanwhile, the market showed little reaction after the US Core PCE inflation gauge aligned with expectations, as investors maintained their outlook for two Federal Reserve rate cuts this year.

European stocks flatlined on Friday, as weak inflation data reinforced expectations of further rate cuts by the European Central Bank (ECB). The STOXX 50 was little changed at 5 280 points, near its highest level since 2000, while the STOXX 600 edged slightly higher to a record 539. Lower-than-expected headline inflation in Germany and France indicated easing price pressures, strengthening the case for additional ECB rate cuts this year. Meanwhile, German unemployment continued to rise, aligning with the ECB’s recent 25bps rate reduction and its signals of further easing ahead.

The offshore yuan plunged to a record low, while Japan’s Nikkei share average dropped as much as 2.30% and Hong Kong stocks fell 1.90% after reopening from the Lunar New Year holiday. The declines came as Trump’s tariffs intensified fears of an escalating trade war and a slowdown in global growth. The US announced a 25% tariff on goods from Canada and Mexico and a 10% tariff on Chinese imports, set to take effect on Tuesday. In response, the affected countries vowed retaliation, with China planning to challenge the tariffs at the World Trade Organization and introduce countermeasures, further fuelling concerns over a trade dispute. China’s economic outlook dimmed further as its manufacturing PMI dropped to 50.1 in January 2025, missing expectations and falling from December’s 50.5, marking the slowest growth in four months. According to Trading Economics, weak foreign orders and ongoing trade tensions are adding pressure on Beijing to roll out additional economic stimulus. Investors are now focused on upcoming key economic data later this week.

The rand weakened by approximately 2%, reaching R19.01 against the dollar on Friday afternoon, following Trump's announcement to cut aid to South Africa. Trump criticized the government for its land expropriation policies and discriminatory treatment of specific groups. This decision was compounded by the US administration's tariff increases on various imports, raising fears of escalating global trade conflicts. These factors contributed to a decline in emerging market currencies, including the rand, as investors sought refuge in safer assets amid growing uncertainty. In response, the government reaffirmed its commitment to land reforms and reassured investors about the stability of its policies. The FTSE/JSE All Share Index closed at 85 956.65 points, showing a 0.32% gain from the previous session.

In commodities, oil prices rose on Friday as markets reacted to Trump’s tariff threats on Mexico and Canada, the two largest crude exporters to the US. Brent crude rose to $77.48 per barrel, while US West Texas Intermediate (WTI) crude also gained 65 cents, reaching $73.38. For the week, Brent is expected to decline by 1.30%, and WTI is set to fall by 1.69%. Bullion reached record highs, closing at $2 798.46 an ounce on Friday. This marked a significant increase from the previous session’s closing price of $2 794.94, influenced by various factors, including geopolitical tensions and market volatility.




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