Global Markets Plunge as Trump's Tariff Strategy Triggers Selloff

Financial markets worldwide experienced a second consecutive day of significant declines following President Trump's announcement of revised tariff strategies on Wednesday. The unprecedented selloff has affected equities, commodities, and precious metals, raising concerns about global economic stability.

The S&P 500 has suffered a record two-day decline, with companies losing over $4 trillion in market capitalization—exceeding the $3.3 trillion loss recorded during March 2020. Gold futures fell dramatically, with the most active June contract dropping $52 yesterday and an additional $80 today, settling at $3,056—a 4.25% decline since Trump's announcement.

Silver markets experienced even steeper losses, plummeting more than 15% over the last two trading days. The most active May contract fell $5.41 to $29.545. Meanwhile, the U.S. dollar strengthened, with the dollar index gaining 0.96% to reach 102.911.

International reaction continues after Trump's Rose Garden presentation on Wednesday. China announced it would impose additional levies of 34% on U.S. imports, confirming investors' fears that a global trade war is now underway.

Federal Reserve Chairman Jerome Powell addressed the situation during a speech to business journalists in Arlington, Virginia, describing a "highly uncertain outlook." Powell indicated caution regarding monetary policy adjustments, stating, "We are well positioned to wait for greater clarity before considering any adjustments to our policy stance. It is too soon to say what will be the appropriate path for monetary policy."

Economic experts have expressed concern about the broader implications. Mohamed El-Erian, Allianz's Chief Economic Advisor, warned that markets were underestimating the tariffs' impact on inflation. He suggested the U.S. would be fortunate to see even a single Federal Reserve rate cut this year and noted that the risk of a U.S. recession "has become uncomfortably high."

Despite market turmoil, the White House issued a press release praising the president for unleashing "Economic Prosperity" and described the week as "highly successful" for Americans. The statement claimed Trump continues his "relentless pursuit of strength, prosperity, and peace" while laying "the foundation for America to be the global powerhouse for generations to come."

The president spent part of the day at one of his Florida golf courses, prompting Senate Minority Leader Chuck Schumer to comment, "While we're here doing all of this, it's my understanding that Donald Trump's out at a golf course… Now I don't know if he's playing today or if he's caddying for somebody."

It is clear that Trump's tariff revisions were considerably more extensive than anticipated. However, the full economic impact remains to be seen in the coming weeks and months

Wishing you, as always good trading,