Global stock markets were under pressure Wednesday after US President Donald Trump broadened his tariff threats, causing European bourses to fall even as the S&P 500 notched a fresh record. President Trump warned that he would impose tariffs “in the neighborhood of 25 percent” on auto imports and a similar amount or higher on semiconductors and pharmaceuticals. “Understandably this has helped drive European carmakers lower, with the likes of Mercedes-Benz, BMW, and VW losing ground,” said Joshua Mahony, chief market analyst at Scope Markets.
European markets experienced significant declines, with London being hit by higher-than-expected inflation figures. Tariff threats also negatively impacted auto firms and semiconductor manufacturers in Tokyo, sending the index into the red. Meanwhile, Wall Street indices veered in and out of negative territory throughout the session before finishing higher.
The S&P 500 rose 0.2 percent to its second straight closing high. “A new high, even by the narrowest of margins, is still a new high, and all new highs are positive,” said Sam Stovall, chief investment strategist at CFRA Research. “The resilience of the market remains encouraging, adding confidence to the continuation of its upward trajectory.”
China, a key target in Trump’s tariffs policy, told the World Trade Organization on Tuesday that the United States risked triggering inflation, market distortions, and even a global recession.
Markets react to tariff threats
The tariff threats added to market uncertainty, especially since Europe and Kyiv were excluded from the first high-level talks between the US and Russia since the start of the war in Ukraine. Frankfurt’s DAX 40 index set another record high during morning trading but ended a two-week winning streak ahead of the weekend elections.
“The uncertainty surrounding the election is likely to negatively impact short-term price developments,” said CMC Markets analyst Konstantin Oldenburger. Asian markets also struggled for direction, with Hong Kong dragged lower by tech firms after Chinese internet giant Baidu’s fourth-quarter earnings saw a fall in revenue and a warning of near-term pressures. The tech sector has helped the Hang Seng Index surge around 15 percent since the turn of the year, spurred by the emergence of Chinese startup DeepSeek’s new chatbot that has revolutionized the AI universe.
President Xi Jinping’s meeting with China’s top business leaders this week — including Alibaba co-founder Jack Ma — added to the optimism amid hopes of a fresh boost for the private sector. The Shanghai stock market rose while Taipei was weighed down by a sell-off in chip giant TSMC. In other company news, Swiss mining and commodity trading giant Glencore dropped more than six percent on London’s FTSE 100 after it reported a net loss for 2024.
Shares in Dutch medical device maker Philips dropped more than 11 percent on the Amsterdam stock exchange after posting worse-than-expected losses.
