US Stocks Continue to Fall Sharply Amid Tariff Announcements and Recession Fears

US stocks closed lower on a turbulent Tuesday, continuing the volatile momentum from the previous day’s selloff, sparked by President Trump’s announcement of additional tariffs on Canada. This move added to the market’s unease over risk assets, driven by the White House’s unpredictable economic policies. The S&P 500 dropped 1.50%, while the Dow plunged by 700 points, and the Nasdaq 100 lost over 1%. The US President imposed 50% tariffs on Canadian steel and aluminum, set to take effect today, and declared a national electricity emergency, signaling the potential for further retaliatory actions against Canada. This followed his admission of a possible recession during a recent interview.

Meanwhile, the FTSE 100 continued its downward trend in afternoon trading on Tuesday, falling by 0.84% to 8 527.81, marking its lowest point since mid-January. The British pound has appreciated by 2.72% against the dollar, which typically impacts export-driven companies. In Europe the Euro Stoxx 50 index closed at 5 497.05, up slightly by 8.80 points at 0.16%, indicating some resilience within broader market concerns. The Stoxx Europe 600 index also showed marginal gains, closing at 540.80 with no significant change from the previous session.

Asian markets closed in negative territory, reflecting investor apprehensions over escalating trade tensions and the potential economic fallout from US tariff policies. The Hang Seng Index closed at 23 782.14, reflecting a minor decrease of 0.01% from the previous day, and the Nikkei 225 experienced a more pronounced decline, closing at 36 793.11, down 235.16 points at 0.64%. Technology stocks were among the hardest hit, with companies like SoftBank Group (TYO:9984) (-2.75%) and Hitachi (TYO:6501) (-2.9%) dragging the index lower. Investors also reacted to weak economic data, including an unexpected rise in Japan's unemployment rate to 2.50% and a decline in capital spending during 4Q24.

In South Africa, the rand traded at R18.18 against the dollar at 18h30 SAST, reflecting a decrease of 1.51% from the previous trading session. Despite ongoing economic challenges such as inflation and trade dynamics, the rand has shown relative stability over the past week, fluctuating between R18.06 and R18.64. However, JP Morgan announced a downgrade of South African equities from overweight to neutral due to concerns about an economic slowdown and the effectiveness of policy reforms in driving growth beyond 2% over the next two years.

In commodities markets, Oil prices declined for a second consecutive day on Tuesday, driven by growing concerns over a potential US recession, the impact of tariffs on global growth, and Opec+'s decision to increase supply. Brent futures dropped by 6 cents, or 0.10%, to $69.22 a barrel at 04h02am GMT. Meanwhile, gold prices rose on the back of a weak dollar and increased demand for safe-haven assets. Investors were awaiting inflation data to better understand the Federal Reserve’s policy trajectory amidst fears of escalating trade tensions and slowing economic growth following US President Donald Trump’s tariffs. Spot gold increased by 0.30%, reaching $2 897.39 per ounce by 02h50am GMT, while US gold futures remained steady at $2 900.80.



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