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Last week, global financial markets experienced significant declines, primarily driven by escalating trade tensions initiated by the United States. On April 2, 2025, President Donald Trump announced sweeping tariffs, including a 10% blanket levy on all imports and higher duties on specific goods from countries such as China, the European Union, Japan, and Vietnam. This aggressive trade policy, dubbed "Liberation Day," aimed to address perceived trade imbalances but instead sparked widespread investor concern and market volatility. ​
In response to the tariff announcements, major U.S. stock indices suffered substantial losses:​
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S&P 500: Entered bear market territory, declining over 20% from its February peak. ​
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Dow Jones Industrial Average: Plummeted by 5.5% (2,231.07 points) on April 4, closing at 38,314.86. ​
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Nasdaq Composite: Declined by 5.8% (962.82 points) on the same day, ending at 15,587.79. ​
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The volatility index (VIX), a measure of market fear, spiked to levels not seen since the early pandemic period, indicating heightened investor anxiety.
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The repercussions extended beyond U.S. borders:
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Asia: Japan's Nikkei 225 tumbled 7.8%, and Hong Kong's Hang Seng Index plunged 13.2%, marking its steepest drop since the 1997 Asian financial crisis. ​
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Europe: Germany's DAX index fell over 6%, reflecting concerns about the continent's export-driven economies. ​​
Certain sectors were notably affected:
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Technology: Companies like Tesla, AMD, and Palantir experienced steep declines due to concerns over supply chain disruptions and increased production costs. ​
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Energy: Oil prices plunged to a four-year low, with Brent crude dropping by 16%, amid fears of reduced global demand. ​
On top of that, Powell hinted that the new tariffs might drive inflation higher than anticipated—exactly the kind of news the market didn’t want. If his goal was to calm investors, he missed the moment. He knew where the S&P 500 stood heading into the event; by 10:50 AM, it was already down more than 5%. Given how fast things were moving, one could argue that a dovish Powell—signaling swift and aggressive rate cuts—might have steadied the market or even pushed it back to breakeven.
But this time, Powell didn’t step in. Maybe he’s letting Trump face the consequences alone, or maybe he’s laser-focused on inflation, not market stability. Either way, there’s no Powell put.
Understanding how markets operate—and assuming Trump stays quiet, which I suspect he will—the market may keep pressing until he caves. In this high-stakes showdown of egos, the market tends to win. It’s broken everyone in my lifetime, and it’s still undefeated.
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