FLASH
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A "Black" Friday that will take its place in the "history books" seems to have been yesterday, as markets recorded one mini-crash after another in the US, Europe and Asia, against the backdrop of the trade war declared this week by Donald Trump.
After China retaliated with 34% tariffs against the United States on Friday, for the tariffs initially announced by President Donald Trump (54% tariffs) on Wednesday, US stocks were hit hard by sellers rushing to sell their shares.
Specifically, the Dow Jones Industrial Average fell 2,231 points, or 5.5%. The S&P 500 fell 5.97%, and the tech-heavy Nasdaq Composite was 5.82% lower.
In fact, the Nasdaq closed in a bear market for the first time since 2022, falling more than 20% from its record high in December.
Meanwhile, the S&P 500 lost $5.06 trillion in market value over the past two days, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.
According to FactSet data, the drivers of losses were shares of Apple, Nvidia and Tesla with combined losses of more than $1 trillion.
The benchmark, which entered a correction on Thursday, has plunged more than 10% over the past two days.
However, investors appear to have abandoned other assets, such as oil, for fear that the trade war could push the global economy into recession, according to CNN.
It is noted that US oil, which fell almost 7% on Thursday, fell another 7.4% to $61.99 per barrel.
Brent crude futures, the global benchmark, fell 6.5%. Both U.S. crude and the global standard were at their lowest levels since 2021.
However, the Russell 2000, which tracks smaller companies, entered a bear market on Thursday.
Elsewhere, European shares fell more than 2 percent after their worst session in eight months.
Uncertainty and fear of recession
An old Wall Street cliché says that markets hate nothing more than uncertainty, according to CNBC.
And while investors got their answer on what tariffs the government will impose, big questions remain about how those tariffs might work over time, including potential higher tariffs from other countries.
“Markets are going to be a little nervous,” says Scott Helfstein, chief investment strategist at Global X.
Investors fear that a dramatic escalation of the trade war could plunge the U.S. and global economies into recession, he notes.
JPMorgan analysts said Thursday that both the U.S. and broader global economies have a 60% chance of slipping into recession this year.
Analysts also said the chances of a recession would increase if countries began to retaliate against the United States, as China did on Friday. Retaliation raises the risk of further escalation and could dampen hopes for negotiations.
“Markets may actually not react, especially if these prices turn out to be final, given the potential impact on global consumption and trade,” said Matt Burdett, head of equities at Thornburg Investment Management.
"The tariffs have introduced a level of uncertainty and instability not seen since the early days of the pandemic."
UBS on Friday cut its year-end target for the S&P to 5,800 from 6,400 and said the U.S. economy could enter a recession in the near term due to the impact of Trump's tariffs.
“In the near term, we believe effective tariff rates could be even higher and without active steps by President Trump to reduce tariffs in the next three to six months, we are likely to enter a downside scenario, including a significant U.S. recession and lower equity markets,” Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management, said on Friday.
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