Trade War Concerns May Spark Early Sell-Off On Wall Street

The major U.S. index futures are currently pointing to a sharply lower open on Thursday, with stocks likely to see an initial sell-off amid concerns about a global trade following President Donald Trump’s tariff announcement.

The steep drop by the futures comes after Trump delivered a highly anticipated speech from the White House Rose Garden on Wednesday outlining his plan to impose sweeping tariffs on U.S. trade partners.

Trump’s “reciprocal tariff” plan calls for a baseline 10 percent tariff to be imposed on all U.S. imports except those compliant with the United States-Mexico-Canada Agreement.

Certain countries deemed the “worst offenders” will face much higher tariffs, with countries like Cambodia, Laos, Madagascar and Vietnam set to be charged nearly 50 percent.

China, which will face a 54 percent tariff rate when the new levies are combined with existing duties, has vowed to take countermeasures.

Canada and the European Union are also preparing countermeasures, leading to concerns about a trade war that could fuel inflation and damage the global economy.

On the trade front, the Commerce Department released a report showing the U.S. trade deficit narrowed in the month of February after soaring to a record high in January.

Stocks once again recovered from an early slump to end Wednesday’s trading mostly higher, adding to the gains posted in the previous session. The major averages climbed well off their lows to end the day firmly in positive territory.

The major averages gave back ground in early afternoon trading but moved back to the upside going into the close. The Nasdaq advanced 151.16 points or 0.9 percent to 7,601.05, the S&P 500 climbed 37.90 points or 0.7 percent to 5,670.97 and the Dow rose 235.36 points or 0.6 percent to 42,225.32.

The early weakness on Wall Street came amid concerns about the impact of Trump’s reciprocal tariffs on U.S. trade partners.

However, as was seen in the two previous sessions, traders seemed to see the early slump as an opportunity to pick up stocks at reduced levels, leading to the subsequent rebound.

In U.S. economic news, payroll processor ADP released a report showing private sector employment in the U.S. increased by more than expected in the month of March.

ADP said private sector employment jumped by 155,000 jobs in March after climbing by an upwardly revised 84,000 jobs in February.

Economists had expected private sector employment to grow by 105,000 jobs compared to the addition of 77,000 jobs originally reported for the previous month.

The Commerce Department also released a separate report showing factory orders increased by slightly more than anticipated in the month of February.

Airline stocks moved sharply higher over the course of the session, with the NYSE Arca Airline Index surging by 2.3 percent after ending Tuesday’s trading at its lowest closing level in over six months.

Significant strength also emerged among networking stocks, as reflected by the 1.8 percent jump by the NYSE Arca Networking Index.

Banking, retail and housing stocks also saw notable strength on the day, moving higher along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are plummeting $4.88 to $66.83 a barrel after climbing $0.51 to $71.71 a barrel on Wednesday. Meanwhile, after jumping $20.20 to $3,166.20 an ounce in the previous session, gold futures are plunging $76.60 to $3,089.60 an ounce.

On the currency front, the U.S. dollar is trading at 145.77 yen versus the 149.28 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1099 compared to yesterday’s $1.0853.

Asia

Asian stocks tumbled on Thursday after U.S. President Donald Trump announced a 10 percent universal tariff on most imported goods along with additional high tariffs on countries the U.S. considers the “worst offenders” based on trade deficits and non-tariff barriers.

The move marks one of the boldest protectionist pushes in recent history and sparked concerns over inflation and growth.

The new reciprocal rate on China will be added to existing tariffs totaling 20 percent, meaning the true tariff rate on Beijing is 54 percent. Goods from India, South Korea and Australia face tariffs of 26 percent, 25 percent and 10 percent, respectively.

U.S. Treasury Secretary Scott Bessent urged trading partners against taking retaliatory steps against the new set of tariffs. “As long as you don’t retaliate this is the high end of the number,” Bessent told Bloomberg Television.

The dollar slid broadly, as the latest tariffs drove investors to safe havens such as bonds, the Japanese yen and gold, which touched a new record high.

Oil prices fell more than 3 percent on fears that a global trade war will curtail global economic growth and weigh on fuel demand.

China’s Shanghai Composite Index dipped 0.2 percent to 3,342.01 cutting early losses amid optimism that a possible increase in fiscal support and pro-business shift will offset trade headwinds from the U.S. An upbeat China Caixin Services PMI report also helped limit overall losses.

Hong Kong’s Hang Seng Index tumbled 1.5 percent to 22,849.81 amid escalating trade tensions. Tech giants like Alibaba and Baidu fell 5 percent and 2.4 percent, respectively.

Japanese markets led regional losses as tariff concerns and a stronger yen hit exporters. The Nikkei 225 Index plunged 2.8 percent to 34,735.93, while the broader Topix Index settled 3.1 percent lower at 2,568.61. Nissan Motor, Toyota Motor, Canon, Sony and Panasonic lost 4-7 percent.

In the tech sector, Softbank tumbled 3.9 percent, Advantest gave up 4.5 percent and Tokyo Electron shed 3.7 percent.

Seoul stocks fell for a second consecutive session as the U.S. imposed higher-than-expected reciprocal tariffs on imports from Asia’s fourth-largest economy.

The Kospi ended 0.8 percent lower at 2,486.70 after hitting a two-month low earlier in the day. LG Energy Solution slumped 4.3 percent, Samsung Electronics lost 2 percent, S K Hynix declined 1.7 percent and Hyundai Motor dropped 1.3 percent.

Defense firm Hanwha Aerospace surged 5.1 percent on winning a 371.4-billion-won export deal from the Indian government.

Australian markets declined, with mining and tech stocks pacing the declines. Gold miners surged, helping limit losses in the broader market to some extent.

The benchmark S&P/ASX 200 Index dropped 0.9 percent to 7,859.70, while the broader All Ordinaries Index closed down 1.0 percent at 8,052.70.

Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index edged up by 0.2 percent to 12,338.57.

Europe

European stocks have moved sharply lower on Thursday, as investors fret about the potential repercussions of the new tariffs announced by U.S. President Donald Trump.

There is apprehension that the new levies could fuel inflationary pressures, cause disruptions in global supply chains and lead to trade wars.

In economic news, HCOB’s final composite Purchasing Managers’ Index for the euro zone, compiled by S&P Global, rose to 50.9 in March from 50.2 the previous month.

The U.K. Services Purchasing Managers’ Index (PMI) rose to its highest since August 2024 at 52.5 from 51.0 in February.

The French CAC 40 Index is down by 2.8 percent, the German DAX Index is down by 2.1 percent and the U.K.’s FTSE 100 Index is down by 1.5 percent.

Banks are turning in some of the worst performances, with BNP Paribas, Commerzbank and Deutsche Bank falling 3-5 percent.

German sportswear retailer Adidas has also plunged more than 10 percent and shipping giant Maersk has tumbled 7 percent.

China-linked luxury goods makers are also facing considerable selling pressure in Paris, with LVMH down nearly 4 percent.

Meanwhile, healthcare stocks are clinging to marginal gains, as the Trump administration exempted pharmaceuticals from reciprocal tariffs.

U.S. Economic News

A day ahead of the release of the more closely watched monthly jobs report, the Labor Department released a report on Thursday unexpectedly showing a modest decrease by first-time claims for U.S. unemployment benefits in the week ended March 29th.

The report said initial jobless claims dipped to 219,000, a decrease of 6,000 from the previous week’s revised level of 225,000.

Economists had expected initial jobless claims to inch up to 225,000 from the 224,000 originally reported for the previous month.

The Labor Department said the less volatile four-week moving average also edged down to 223,000, a decrease of 1,250 from the previous week’s revised average of 224,250.

The Commerce Department also released a report on Thursday showing the U.S. trade deficit narrowed in the month of February after soaring to a record high in January.

The report said the trade deficit decreased to $122.7 billion in February after spiking to a revised $103.7 billion in January.

Economists had expected the trade deficit to fall to $123.5 billion from the $131.4 billion originally reported for the previous month.

The smaller trade deficit came as the value of exports surged by 2.9 percent to $278.5 billion, while the value of imports was virtually unchanged at $401.1 billion.

At 10 am ET, the Institute for Supply Management is scheduled to release its report on service sector activity in the month of March.

The ISM’s services PMI is expected to edge down to 53.0 in March from 53.5 in February, but a reading above 50 would still indicate growth.

The Treasury Department is due to announce the details of this month’s auctions of three-year and ten-year notes and thirty-year bonds at 11 am ET.