Thursday saw a sharp decline in global equity markets, while gold surged to near-record highs. Investors marked two key milestones: one month since Donald Trump returned to the White House and five years since COVID-19 first sent shockwaves through financial markets.
Gold prices soared, inching close to the $3,000 per ounce mark as fears of a potential global trade war escalated. This surge marked bullion’s tenth record high of the year, driven largely by investors seeking safe-haven assets.
Concerns grew after Trump issued fresh tariff warnings on key industries, including pharmaceuticals, semiconductor chips, and wood. Additionally, he signaled plans to impose tariffs on car imports as early as April 2.
Wall Street saw significant losses across major indices, with financials, consumer discretionary, consumer staples, industrials, and communications services taking the hardest hit. The Dow Jones Industrial Average slid 1.31% to 44,042.00, the S&P 500 dropped 0.78% to 6,096.32, and the Nasdaq Composite fell 0.80% to 19,895.73.
This dip came just a day after the S&P 500 had set a new record high, following the Federal Reserve’s January meeting minutes. Fed officials expressed concerns over inflation and the economic impact of Trump’s policies, adding another layer of uncertainty to already jittery markets.
The U.S. dollar remained subdued against major currencies, while the Japanese yen gained strength as traders speculated on further interest rate hikes by the Bank of Japan. European stock markets also felt the pressure, with Germany’s DAX falling 0.41% and the pan-European STOXX 600 slipping 0.11%.
Adding to the turbulence, Germany is now gearing up for a snap election after Chancellor Olaf Scholz’s coalition government collapsed. Analysts predict a shift towards a conservative-led two-party coalition, adding another layer of uncertainty to Europe’s largest economy.
Despite the recent volatility, some market experts believe investors will eventually adjust to this evolving landscape. Wasif Latif, President and Chief Investment Officer at Sarmaya Partners, noted that while headlines are stirring uncertainty, the market will gradually adapt—just as it did during Trump’s previous term.
“The market just needs to come to terms with this new environment,” Latif explained. “Like in the prior Trump administration, over time, markets will begin to discount and adjust to some of these headlines.”